Black & Decker ratings on review for upgrade-Moody's

NEW YORK, Nov 2 (Reuters) - Black & Decker Corp's (BDK.N) bond and commercial paper ratings may be upgraded due to its announced plans to be acquired by Stanley Works, whose ratings may be cut, Moody's Investors Service said on Monday.

Tool maker Stanley Works (SWK.N) said it will buy rival Black & Decker Corp in a $3.46 billion stock deal that is expected to result in $350 million in annual cost savings. For more details, click on [ID:nBNG511551]

Moody's placed Black & Decker's Baa3 senior unsecured and Prime-3 commercial paper ratings under review for possible upgrade. Stanley Works has an A3 rating, the seventh highest.

"If completed, the combined company will benefit from increased scale and product diversity, and will benefit from a stronger balance sheet than Black & Decker on a stand-alone basis," Moody's said in a statement.

Moody's also placed Stanley Works' A3 senior unsecured, and the Baa1 junior subordinated debt under review for possible downgrade because the proposed transaction "will likely result in increased financial leverage and weakened interest and fixed charge coverage, as Black and Decker's debt, lease obligations, and pensions are assumed by Stanley along with its operating assets and cash flows," Moody's said.

Moody's affirmed Stanley Works' Prime-2 commercial paper rating, the second highest. (Reporting by Walden Siew; Editing by Dan Grebler)