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By ASHLEY M. HEHER
The Associated Press

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

Stanley shareholders will own about 50.5 per cent of the combined company and Black&Decker shareholders about 49.5 per cent after the all-stock deal is complete. The new company, Stanley Black&Decker, will be the largest tool maker in the United States.

Stanley Chairman John F. Lundgren will be president and chief executive officer.

"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," Lundgren added.

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 US$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.