Stanley Works (SWK) is already identifying possible acquisition targets in health care and infrastructure: two areas it expects to develop for growth following its combination with Black & Decker Corp. (BDK), Stanley Chief Operating Officer James Loree said Tuesday.

"Do we have specific targets? The answer is yes," Loree said during questions at the Baird Industrial conference, which was Webcast.

"Back in 2002 and 2003, we had talked about building our security business to a billion-dollar-plus platform when it was $300 million in revenue, and everyone looked at us with skepticism, but we methodically went about doing that," he said. "We're taking the same exact approach to health care and infrastructure."

Loree also reiterated financial expectations outlined last week when the two household names in the tools market announced the $4.5 billion deal. Among them: the merger should close in the first half of 2010, should yield $350 million in cost cuts within three years and should boost earnings per share by $1 within three years.

The deal would give Black & Decker shareholders 1.275 shares of Stanley for each share.

Stanley shares recently traded at $50.18, implying Black & Decker shares would be worth about $63.98. Black & Decker shares were down 2 cents at $62.25 in recent trading.

Stanley Works and Black & Decker said last week they expect health care and infrastructure could grow to $1 billion businesses over time.

Health care currently represents revenue of about $350 million at Stanley, Loree said. "It's a great business," he said. "We know in our case the niches we've found thus far are extremely profitable and it's certainly a very attractive area for us to grow into."

Loree noted that Best Access Systems was the first significant acquisition by Stanley as it grew its security business several years ago. "We would like to find in infrastructure the infrastructure equivalent of the Best Access acquisition we did," he said.

Loree said initial feedback from the largest customers of Black & Decker and Stanley Works "has been quite positive, pretty much across the board."

"Some of the really big customers are really looking forward to this getting done," he said.

At the same time, Loree played down the idea that a combined Stanley and Black & Decker will gain pricing leverage at home centers and discount retailers.

"There's no such thing as leverage with the big boxes and home centers," he said.

But he predicted the new company will be more attractive to all customers, large and small.

"We'll be a world class supplier," he said. "We'll have a partnership with them and we'll help them grow and make money."

-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com
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