Stanley B&D to Buy InfoLogix - Analyst Blog

Stanley Black & Decker (SWK) signed a definitive agreement to acquire InfoLogix Inc. (IFLG.PK) in a cash transaction amounting to $61.2 million, including assumption of debt. The completion of the transaction is expected early in the first quarter of 2011, subject to various closing conditions.

Per terms of the agreement, Stanley will acquire each outstanding share of InfoLogix at $4.75 each. Debt assumed will include current outstanding debt of $22.1 million and a portion of debt convertible into InfoLogix's common shares.

The acquisition of InfoLogix seems to be a positive move for Stanley's Healthcare Solutions growth platform, as it specializes in providing enterprise mobility solutions for the healthcare and commercial industries. The transaction will add mobile workstations and asset tracking solutions to Stanley's existing business.

Stanley Black & Decker has embarked on a growth strategy of shifting its business portfolio toward favored growth markets through acquisitions and divestitures, thus ensuring expansion of its global business platform, including Convergent Security, Mechanical Security, Engineered Fastening, Infrastructure and Healthcare. The company also targets its infrastructure platform to grow roughly $1-$2 billion in over 5 to 7 years.

In March 2010, Stanley acquired ADT France, thereby expanding market share in France and security footprint in Europe. The same month, Black & Decker Corporation was acquired. It expanded the company's global business platform. Stanley's recent acquisition of CRC-Evans promises exposure to the oil and natural gas infrastructure.

We believe that Stanley Black & Decker has a significant long-term upside potential with near-term growth prospects dampened by active competition in all its businesses, extreme dependence on the housing industry, rising integration risks and exposure to risks associated with sourcing and manufacturing overseas.

We currently maintain a Neutral recommendation on the stock.