(Reuters) - U.S. toolmaker Stanley Black & Decker Inc (SWK.N) is in talks to acquire Consolidated Aerospace Manufacturing LLC (CAM), in a bid to expand its offerings to the aerospace sector, people familiar with the matter said on Friday.
The attempted deal illustrates how Stanley Black & Decker is seeking to diversify its business beyond tools and storage, which account for about two-thirds of its revenue. CAM makes fasteners and other components for the aerospace industry.
Stanley Black & Decker has outbid private equity firms in an auction for CAM, and is seeking to clinch a deal as early as this month, the sources said, cautioning that an agreement is not certain. Stanley Black & Decker could value CAM at more than $1 billion, including debt, in a deal, the sources added.
The sources asked not to be identified because the negotiations are confidential. Stanley Black & Decker declined to comment, while CAM and its private equity owner, Tinicum Inc, did not immediately respond to requests for comment.
Stanley Black & Decker, which has a market capitalization of $26 billion, is a provider of hand tools, power tools and related accessories, electronic security solutions, healthcare solutions and engineered fastening systems.
The New Britain, Connecticut-based company has spent more than $10 billion on acquisitions in the last two decades, including on the tools business of Newell Brands Inc (NWL.O) for $1.84 billion, and on the Craftsman brand of Sears Holdings Corp for $937 million.
However, balking up on tools has increased the company’s exposure to big box retailers such as Home Depot Inc (HD.N) and Lowe’s Companies Inc (LOW.N), which limits its bargaining power. The CAM deal would help it boost its engineered fastening and infrastructure business.
Headquartered in Brea, California, CAM was launched by Tinicum in 2012 as a holding company for several manufacturing firms active in aerospace component sector. Among CAM’s holdings are Bristol Industries, E.A. Patten, Aerofit, Voss Industries, 3V Fasteners, QRP and Moeller.
Credit ratings agency Moody’s Investors Service Inc has called CAM’s operational history “mixed,” as the company has struggled to integrate some of its acquisitions.
Moody’s also said in October it expected CAM’s favorable aerospace fundamentals and good execution to support mid-single-digit sales growth along with healthy profitability.
However, CAM is also exposed to the volatility of the cyclical commercial aerospace markets because of its limited scale, Moody’s cautioned.
Reporting by Joshua Franklin in New York; Editing by Nick Zieminski