updated 11/2/2009 6:25:28 PM ET 2009-11-02T23:25:28

Stanley Works tool company is buying rival Black & Decker Corp. for $4.5 billion, the two companies said Monday, bringing together two of their industry's mammoth brands.

Stanley shareholders will own about 50.5 percent of the combined company, which would be the nation's largest tool maker and be named Stanley Black & Decker. Black & Decker shareholders will own approximately 49.5 percent after the all-stock deal is complete.

Stanley Chairman John F. Lundgren will be president and CEO.

"This is a unique opportunity to bring together two great companies, each with first-rate brands, and provide enhanced opportunities to generate superior returns as we build on this new, larger platform," Lundgren said in a statement. "Joining these two companies together creates a powerful engine for growth, both as markets around the world recover and over the long-term."

Under the terms of the deal, Black & Decker shareholders will receive 1.28 shares of Stanley Works for each share they own. The nine members of Stanley Works' board will remain in place and be joined by six new members from Black & Decker's current board.

Executives said the deal will cut costs $350 million, possibly including job cuts, and grow earnings per share by $1 within three years.

Executives said most of the savings will come from reducing corporate overhead and consolidating business units and manufacturing, distribution and purchasing.

Black & Decker, based in Towson, Md., has 22,100 workers. Stanley Works, based in New Britain, Conn., has 18,200 workers.

Boards of directors for each company have approved the deal, but it still must win regulatory and shareholder approval. It's expected to close in the first half of 2010.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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