By Shawn Langlois, MarketWatch
SAN FRANCISCO (MarketWatch) – Stanley Works announced Monday a $4.5 billion all-stock deal to acquire Black & Decker Corp., in a bid to create a more powerful tool giant that would be poised to capitalize on a housing rebound.

Black & Decker (BDK 57.83, +10.49, +22.16%) stock closed mostly flat at $47.34 before jumping more than 20% after the announcement and pushing past $56 in late trades.

Stanley Works (SWK 47.13, +1.98, +4.39%) also moved higher, up almost 4% to $46.90 in after-hours action.

Under the terms of the deal, Black & Decker shareholders will receive 1.275 shares of Stanley for each share they own of Black & Decker. That represents a 22.1% premium to Black & Decker’s closing price Friday.

“This looks like a really strong deal for both companies and ultimately demonstrates that they’re positioning themselves ahead of renewed demand from the housing sector,” Wall Street Strategies analyst Brian Sozzi said. “Make no mistake; the deal announced this evening is mostly about cost synergies long-term.”

Stanley will own 50.5% of the newly created company and Stanley Chairman and Chief Executive John Lundgren will take over as chief. Nolan Archibald, chief executive of Black & Decker for 24 years, will become executive chairman for three years.

The nine members of the current Stanley board of directors will be joined by six new members from Black & Decker’s board.

“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,” Archibald said in a statement.

The companies are looking for the combination to also add $1 a share to the bottom line by the third year.

Shawn Langlois is a reporter for MarketWatch in San Francisco.

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