Sears Holdings will continue to source and sell Craftsman-branded products in all its retail channels under a perpetual license agreement.

Sears Holdings Corporation has sold the Craftsman brand to Stanley Black + Decker.

Under the terms of the agreement, Black + Decker will pay Sears Holdings $525 million at closing, $250 million at end of year three and annual payments on new Craftsman sales through year 15. The net present value of all these payments is approximately $900 million.

Furthermore, Black + Decker will now own the rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries.

"Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value," says James Loree, president and chief executive officer, Stanley Black + Decker. "This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels.  We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online. To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S.  This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years.

Additionally, Sears Holdings will continue to offer Craftsman-branded products, sourced from existing suppliers, through its current retail channels via a perpetual license from Black + Decker, which will be royalty free for the first 15 years after closing.

The transaction, which was approved by the boards of directors of both companies, is expected to close during 2017.

"We are pleased to reach this agreement, after determining that externalizing the Craftsman brand would accomplish our goals of driving value for Sears Holdings and positioning Craftsman for future growth,” says Edward Lampert, chairman and chief executive officer, Sears Holdings. “This transaction represents a significant step in our ongoing transformation to a membership focused business model.  Craftsman has a storied history as an iconic American brand and in Stanley Black + Decker we have found a great owner that is committed to expanding Craftsman and helping it to reach its potential outside of its current channels. It's important for our members to know that we will continue to sell Craftsman in-store and online at Kmart and Sears, and Sears Hometown, and the structure of the transaction will provide Sears Holdings with a significant upfront payment, another payment in three years and an opportunity to participate in the growth of the Craftsman brand in both our stores and at other retailers selected and managed by Stanley Black + Decker. Looking ahead, we will continue to take actions to adjust our capital structure, meet our financial obligations and manage our business to better position Sears Holdings to create long-term value by focusing on our best members, our best stores and our best categories."