News outlets reported yesterday that Newell Rubbermaid is selling off some of its brands, such as its Irwin and Lenox tool brands. There are several other brand names under Irwin, such as Unibit, Vise-Grip, Hanson, Marples, and possibly others, that I assume will be included in the sale.
It’s unclear who will be snatching up the 2 tool brands, or Newell Rubbermaid’s other unwanted brands.
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If you ask me, I think TTI, the company that owns Milwaukee Tool, as well as Ryobi and Ridgid power tool activities in North America, is going to be the most likely potential buyer.
TTI has an incredibly strong relationship with Home Depot, but I don’t think they have any presence in Lowes’ tool department. Lowes and Irwin seem to have a good working relationship, with more Irwin tools popping up on shelves than in past years.
TTI’s brands’ specialties are mainly power tools, but Milwaukee has rather quickly grown their hand tool catalog. Milwaukee Tool also purchased Empire Level not too long ago, and is already helping to churn out lots of new developments and improvements.
TTI also owns the Hart brand, which makes hammers and some clamps, and Stiletto.
Buying up Irwin and Lenox would give TTI presence in a wider range of stores, most notably Lowes, seemingly without interfering with their strong and important relationship with Home Depot.
I’m not certain as to what sort of Irwin or Lenox manufacturing capability TTI could benefit from, but there are some non-overlapping product categories that might be of interest to their other tool brands.
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A Bloomberg article mentioned TTI, Stanley Black & Decker, Apex Tool Group, and Husqvarna potentially looking to buy the Craftsman brand from Sears, and suggests that Irwin and Lenox could be possible consolation prizes.
Apex Tool Group? There would be a lot of overlap with Irwin’s hand tools, but I suppose the power tools accessory segment might be of interest to them.
Stanley Black & Decker? I can’t see them wanting much from Irwin and Lenox, at least not enough to justify buying their entire businesses.
Chervon might be a secret player that’s considering both Irwin and Lenox, and Craftsman businesses. I wouldn’t think them to be big enough to buy Craftsman, but they did just buy Skil from Bosch.
I’m sure TTI leadership is considering purchasing Irwin and Lenox, either as a standalone brand, or for under Milwaukee Tool leadership.
Actually, that could also present several additional benefits, if Milwaukee purchased Irwin instead of TTI. Right now, Milwaukee, Ridgid, and Ryobi tools seem to be positioned as best, better, and good, and even though Milwaukee is separate from TTI’s Ryobi and Ridgid power tool efforts, there is evidence of cross-talk between all the brands.
If somehow Irwin ended up under Milwaukee, this would provide the opportunity for “good” and “better” positioning, ignoring the potential for Irwin to continue being prominent in Lowes stores.
This would give Milwaukee and TTI greater exposure to lower hand tool pricing ranges, putting them in position to compete even more fiercely with Stanley Black & Decker.
I could see TTI being interested in the Craftsman brand for the same reason, although most of Craftsman tools are made by outside companies, complicating the sale of Craftsman to anyone.
Stanley Black & Decker, for example, might have a tough time buying the Craftsman brand and selling the tools anywhere. It would take redesigning practically every Craftsman SKU, aside for some of their power tools, such as their Black & Decker-made modular Bolt-On power tools. Otherwise SBD would face having to pay competitors to make the tools for them, as Craftsman has been doing as a private label brand with no manufacturing facilities of their own.
Other companies will have the same difficulty, except for Apex Tool Group, who already makes a lot of hand tools for Craftsman. In terms of power tools, Chervon and TTI make up most of Craftsman’s cordless offerings, and possibly their corded tools as well.
I didn’t mean to digress so far from discussion about who might buy Irwin and Lenox tool brands, and why, but it’s true that Craftsman potentially being up for sale could complicate things.
As for Craftsman being up for sale, that hasn’t been confirmed, but has been discussed as being under consideration.
Mike
Craftsman is not only being sold, it is being sold this month. Sears Holdings cannot continue without the cash infusion.
BonPacific
Do you have a source/reference?
Mike
https://www.thestreet.com/story/13841021/1/sears-shld-stock-soars-craftsman-unit-attracts-takeover-interest.html?puc=yahoo&cm_ven=YAHOO&yptr=yahoo&ref=yfp
https://www.thestreet.com/story/13841052/1/sears-selling-craftsman-for-2-billion-likely-won-t-keep-it-afloat.html?puc=yahoo&cm_ven=YAHOO&yptr=yahoo&ref=yfp
http://www.bloomberg.com/news/articles/2016-10-04/sears-s-craftsman-said-to-draw-interest-from-black-decker-tti
and a ton of others yesterday and today. It sounds like Sears ‘accidentally’ leaked the information in order to drive up share prices.
Stuart
Right, but are they getting their info from?
The Street is just building off of what Bloomberg posted. “The people??”
Jimmie
I hope the sale doesn’t affect the quality of Lenox band saw blades.
Nate
You ought to try MK Morse band saw blades, far superior imo.
Erik
Sorry to be off toppic, but I hope TTI steps up. Like the article states now, Chervon makes some of them too, but I read that TTI has had a pretty long standing relationship with Craftsman and has been making them some cordless power tools for a while.
I could be wrong, but I read the 1/2” Brushless drill was produced for Craftsman by TTI, and if so they put out a killer product with this offering, Ive abused, that thing, re modeled a bathroom, and lately used it to mix thinset. No problem. And at a killer price point.
They’ve had no new C3 19.3 releases in a while, but with the performance of this dril and the last updated 19.2 recip saw I hope someone does something with the brand!
BonPacific
Personally I think Craftsman as a brand should be taken back to hand tools, price them accordingly, and bring back the warranty. It’s a pipe dream I know.
The C3 platform has it’s proponents, but I don’t think it fits anywhere in TTI’s brand portfolio. Adding a fourth major power tool line muddies the waters too much for them, unless they are planning to drop the Ridgid license and replace it with Craftsman.
Tj
Nope- the brushless is Chervon (it IS a badass, though)
Almost everything else is TTI, though
fred
Interesting.
At one time those brands – that included ones you note above plus QuickGrip and Marathon (Irwin-Marathon) and Whitney (Hanson-Whitney) and Record were all bundled under the “American Tool” banner. That in itself I found a bit disingenuous considering some (Record, Marples) were venerable made-in-England brands and others like ViseGrip had seen production moved from the USA to Asia.
I also wonder if Hilmor (a more recent Newell launched company) is also on the sales block.
As far as buyers – I could speculate that Hangzhou Great Star might be in the hunt.
Toolfreak
Kinda weird this news popped up as just the other day I was thinking maybe Apex tool (or Danaher) would be a good choice to buy the Craftsman brand since they already make most of the hand tools, and then commented in the Irwin thread that Newell-Rubbermaid should sell off the Vise-Grip business so they could be made in the USA again.
I wonder if Apex could get the Craftsman hand tool business, and TTi could get the power tool business? Maybe Apex will just have TTi keep making the power tools.
I don’t see Chervon buying Craftsman, even for the power tool business, now that they have Skil, but maybe they are interested in buying up all the brands they make the tools for so they can just keep manufacturing the same tools under the same brands, but while owning the brands.
Pretty sad that Vise-Grip production probably won’t be brought back to the US no matter who buys it since all of the companies have China and Taiwan based production, but we can hope the buyer sees potential and profit in at least manufacturing a line of Vise-Grips in the US and selling them at a premium as professional tools.
Thing is, no matter who buys Irwin and Lenox, I can see them still being sold where they are now, in big box and smaller hardware stores, and online. I’m not so sure where even Apex would sell Craftsman tools if they get the brand, much less any of these other companies. I was thinking maybe Apex would rebrand their non-ratcheting wrenches as Craftsman (which is pretty much what they are now anyway), but that’d be pretty incredible to see the Craftsman brand all over the place like Gearwrench is.
Looks like the tool world is in for a big change, one day it will seem odd to people that Craftsman tools were only sold at Sears and a few other places.
Guy
I see Chervon maybe making a play, seems like they’re wanting to establish some brands more than just OEM. If I’m not mistaken they created the Ego line right? Very interested to see what happens, it seems like the whole arena has gotten increasingly competitive in the past 5 years.
Stuart
It would be interesting for them to do so, but I’m unsure if Chervon can elevate Irwin or Lenox to new levels.
Part of the success of the Ego line, aside from good quality, is that the cordless outdoor power equipment category was just kicking off. There was room for more players, and a strong partnership with Home Depot had pushed Ego into a strong position.
Buying both brands would be a huge open door for Chervon, but it’s unclear as to whether they have the money or prowess to compete with established hand tool and power tool accessory brands.
Then again, Chervon is somewhat of a secretive OEM – who knows what they already have their feet in.
If you’re talking about Craftsman, I think that might be too big of a lion for them to tame.
jaytkif
TTI and Craftsman seems like a good fit. They already do some work with C3 power tools, and they could get into a number of stores with both hand and power tools. For them, Ryobi is at Home Depot, and Craftsman could be a number of other places. They could engineer the lines together, and do well in a number of categories.
Stanley B&D would probably leverage the name if they bought it, with the goal of gaining market share by taking out a competitor, and having more shelf space in major retailers. Makes sense there too.
From reading the Bloomberg article yesterday, it sounds like a bid situation closing at the end of the month for Craftsman. Sears clearly needs the cash flow.
Given the competitive bid situation, I can’t see any organization without the ability to make both hand and power tools being able to justify the purchase.
I could also see TTI purchasing Irwin, as it would help them gain entry to Lowe’s, and allow them to have a number of quality hand tool options.
I saw the article yesterday and I KNEW there would be a post here with more context, nice work.
But, I guess the question I have is this, why are so many tool brands up for sale right now? Is it a matter of a saturated market without enough disposable income? Overproduction of tools, or putting out new options at too fast of an interval? Or just too many brands out there in a declining retail environment?
fred
Maybe its a good time to sell. Housing construction that had been in a slump (beginning in 2008) has been in pretty decent shape for the last 3 years – so maybe a potential buyer will ignore the cyclical trends and only see the future through rose colored glasses – pushing tool sales estimates up – and tool company value up along with it.
Stuart
These things happen all the time. Well, not all the time, but often enough.
Newell Rubbermaid selling Irwin and Lenox? It’s probably a dollars and sense consideration. The guys at the top look at the big picture.
Maybe Newell wants the cash to buy other brands better aligned with their more profitable business? It’s hard to say.
Milwaukee buying Empire Levels? Strategy, and very good strategy at that.
Sears selling Craftsman or potentially selling Craftsman? This would be a last ditch survival measure, at least as I see it.
fred
Just as likely that Newell-Rubbermaid (actually now renamed Newell Brands) is having a financial stomachache after swallowing Jarden (brands under the Lehigh Group banner, Coleman, Loew-Cornell, etc.) I know that their reported earnings per have dropped after the acquisition – which reportedly cost them over $15billion in stock and cash.
Toolfreak
Usually when corporations sell off brands they bought, it’s because they didn’t wind up being the great investment they were expected to be, so they are sold off in favor of what they hope are better investments. If Newell now has all of Jarden’s brands, it probably is related, and they are selling off Irwin and Lenox in favor of brands with products they think they can do better with.
Craftsman has been on the block for awhile – it’s been known that all of Sears’ big brand names would be up for sale when Eddie Lampert put them all under Sears Holdings and trotted out the idea of licensing the brands, it just wasn’t certain whether the brand names would be sold outright after the last Sears store closed or while they were still in business. I’m guessing there will be some kind of contract that allows Sears to use the brand and keep selling the tools until they go away.
fred
Probably true. It may also be that Irwin and Lenox are deemed the most easily or best sold. That sale might give Newell enough cash to buy back some of the extra stock they issued to complete the Jarden purchase. A stock buyback would then get Newell’s EPS back up. Their EPS had slipped from a reported $0.54 (June 2015) to $0.34 (June 2016) and that’s a big deal.
Toolfreak
Typed “Newell Brands” into Google and got a lot of artices about the sale, look like they are selling off 10% of their brands:
http://www.ajc.com/business/newell-has-dropped-metro-atlanta-will-now-shed-businesses-workers/vH9cBOZMZfdPvXLsZ6VciJ/
Money is likely the first consideration, but I’d say they are also consolidating the type of products they deal with, which is probably a good idea as well. A company that deals in everything from household goods to hand tools and winter sports equipment probably isn’t going to do as well as one with a more limited focus.
Hopefully all the brands will do better under new ownership.
fred
Yeah it is probably always better to “stick to your knitting” and focus on what you do best. If you stockholders wanted to buy into a little bit of everything they could just buy an S&P-500 fund. The link you posted points to what is often typical of M&A . You buy a company in hopes of being able to consolidate, combine operations, reduce duplication, gain further economies of scale, trim workforce and increase profits. Often sell offs occur after the merger – especially (as in this case) if you earnings per share drop. When Newell acquired Rubbermaid in 1999 – the merger was deemed by some as “the merger from hell” since stockholders of both companies lost up to 50% of their stock’s value and something like a half a billion in goodwill had to be written off.
I’m not sure what’s up with the move of the corporate offices to Hoboken NJ- as I think Jarden had been headquartered in NY – but that also is one of those things with states using tax rebates and incentives to compete for jobs
Andy
Rubbermaid has already destroyed the Vise-Grip name, by shifting production to China.
Not much value left in that brand, IMHO, but the average Joe doesn’t see the difference.
Stercorarius
I second that.
fred
While not destroying themselves in the bargain – they may have done some damage.
Their Return on Equity (ROE) was hovering around 20% in 2015. For the quarter ending June 2016 it was 7.72%. The issued stock to buy Jarden – increased equity holdings by 538% but income from the combined (Newell Brands) company was only up 234% over what the much smaller Newell-Rubbermaid had reported. I can’t imagine that most of their owners (stockholders) are happy in the short term.
http://csimarket.com/stocks/NWL-Return-on-Equity-ROE.html
Oleg Kuperman
And they will probably be selling them forever, mostly because Rubbermaid is the only name I recognized that makes things I actually buy and don’t mind using, and it’s not even for sale! The companies they’re trying to unload sell cheap, crappy tools that are easily surpassed by even the likes of Husky.
BonPacific
Its the modern market. Very few brands represent anything anymore. Most of what these brands sell is OEM and white-label stuff with a name slapped on. So you get some good (NWS pliers) with a lot of bad (Chinese vice-grips).
Rich
you have no idea what you’re talking about….comparing LENOX to Husky that’s laughable
Nate
Sad to say but i think Craftsman is s dying breed and is presently so convoluted that i wouldn’t touch them with a ten foot pole! Doesn’t make sense to buy the brand.
Jeffery
Craftsman was always a “good enough” tool brand. It was low prices for the masses. While Monkey Wards was selling Wright and Bonney sockets, Craftsman was selling Danaher and SK… The machine tools were the same. Craftsman was selling Atlas brand lathes, Monkey Wards had much better (Logan). Point being… Craftsman is a good brand, not a great brand. You could walk into a Sears and buy a ton of tools, made in USA with a lifetime warranty, for not much money. Now the tools are made in china. That loses them some good will. The constant reminder that Sears Holdings is also going to lose good will.
The remaining appeal is still the mass volume of tools for not a lot of money (3pc pry bar sets for $11.99 on sale, screwdriver sets that work out to a dollar a screwdriver…), and the warranty. Will the warranty survive this sale? It really puts whoever buys them on the hook for all future warranty obligations. If they do not continue to warranty the older tools… Well, I think that will really kill most of their remaining good will. After that, the appeal will just be the cheap prices.
Toolfreak
Whoever buys the brand will likely inherit the warranty obligations, but I’d say it also depends on the venue where the tools are sold if/when Sears and Kmart no longer exist. If Apex buys the brand, they’d likely warranty tools they still sell the same way they do with Gearwrench, or maybe if brick & mortar stores like Ace continue to carry Craftsman, they will be a place to get a new tool under warranty.
If the new buyer no longer puts the Craftsman name on hand tools, the warranty is likely gone, since most of the other stuff with the Craftsman name only has a limited warranty.
It will definitely be interesting to see who buys and what they do.
red92s
Former Lenox employee here. Lots of good people in East Longmeadow. Enjoyed my time there and they made some good stuff. Hope they get sold to someone who has an interest in more than just putting the name on more stuff from China.
Carmen DeMaio
I’m an employee at Lenox, very worried, I don’t think the billion dollar companies care where anything is made anymore.
fred
So the announcement is out – at least as reported on CBS news this morning that
Stanley-Black&Decker has said that they will be buying Lenox