FREEPORT, Ill. - Newell Rubbermaid Inc., the maker of housewares including Calphalon cookware and Vise-Grip pliers, agreed yesterday to buy closely held American Saw & Mfg. Co. for $450 million to expand its power-tool accessories and hand-tools businesses.
The transaction is expected to close by year-end and to add 4 cents a share to Newell's 2003 earnings, the company said. American Saw, the maker of Lenox utility knives, had sales of $185 million in 2001, according to Freeport, Ill.-based Newell.
This is the second tool purchase this year by Chief Executive Officer Joseph Galli, the former Black & Decker Corp. executive who built up that company's DeWalt brand.
In April, Newell bought the part of American Tool Cos. it didn't already own. Galli is trying to gain a bigger share of the $12 billion global tool market, where hundreds of small businesses compete with larger companies such as Newell.
"This is a natural fit with the American Tool acquisition," Newell Chief Financial Officer Bill Alldredge said in an interview. "It gives us size and importance" in the market.
Moody's Investors Service said it may cut Newell's credit rating one level, affecting about $3 billion in debt, depending on how the company pays for the purchase. Moody's rates Newell Baa1, the third-lowest investment-grade rating.
The acquisition will help Newell increase shelf space at retailers such as Home Depot Inc. and Lowe's Cos., thereby boosting sales to professional tool users such as contractors, Alldredge said.
As president of Black & Decker's global power-tools unit, Galli made the DeWalt brand a $1.25 billion-a-year business by demonstrating and lending tools to professional contractors at their job sites. He spent 19 years at the world's largest power-tool maker.
Before coming to Newell last year, Galli was president and chief operating officer of Amazon.com Inc., the world's largest Internet retailer, and CEO of Web-site manager VerticalNet Inc.
James Roberts is the head of Newell's Levolor and hardware group. He came to the company last year from Stanley Works, the largest U.S. hand-tool maker, where he was president of the worldwide hand-tools and hardware unit. He, too, spent 19 years at Black & Decker.
American Saw, based in East Longmeadow, Mass., was founded in 1915 and employs more than 800 people, Newell said.