Tool manufacturer Stanley Works is to buy its power tools and DIY equipment rival Black & Decker.
The deal, worth $4.5bn (£2.7bn), means Stanley shareholders will own about 50.5% of the combined company, which will be called Stanley Black & Decker. The deal will give Black & Decker shareholders 1.275 shares of Stanley Works for each share they own. Based on Monday’s closing price, that values Black & Decker at $57.57 a share, a 22% premium.
Stanley’s chairman and chief executive John Lundgren said the all-share deal represented a “unique opportunity” although the plan still needs regulatory backing.
“The complementary product and market fit of these two companies creates significant value for both companies’ shareholders that neither company can accomplish on a stand-alone basis,” Nolan D. Archibald, chief executive of Black & Decker, said in a statement.
The two firms estimate that joining forces will cut their combined costs by $350m, possibly including job cuts.
Black & Decker has 22,100 workers to Stanley’s 18,200.
The proposed merger would put under one corporate umbrella a number of familiar consumer brands: DeWalt, Kwikset and Price Pfister from 99-year-old Black & Decker, and Mac Tools, Stanley Security Solutions and FatMax from 166-year-old Stanley Works. The deal is the largest in the US consumer products sector this year, according to Dealogic, a data research firm.