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Tool maker Stanley Works agreed to acquire rival Black & Decker in an all-stock merger valued at $4.5 billion, the two companies announced.
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Black & Decker's [BDK
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] stock soared in after-hours trading following the announcement, which came after the stock market closed. Click here for an after-hours quote.
Stanley Works shares [SWK
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] were relatively unchanged. Click here for an after-hours quote.
"The driving motivation of the transaction is the present value of the $350 million in annual cost synergies and the combined financial strength and product offerings of the merged companies," said Black and Decker CEO Nolan Archibald.
The deal is expected to add about $1 per share to the earnings of the combined company, Stanley Black & Decker, by the third year after closing.
"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," Stanley Chief Executive John Lundgren said in a statement.
Under the terms of the transaction, which has been approved by the boards of both companies, Black & Decker shareholders will receive a fixed ratio of 1.275 shares of Stanley common stock for each share of Black & Decker common stock they own, representing an implied premium of 22.1 percent to Black & Decker's share price as of Friday, the companies said in a press release.
When the merger is completed in the first half of 2010, Stanley shareholders will own approximately 50.5 percent of the equity of the combined company and Black & Decker shareholders will own approximately 49.5 percent, the release said.
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