Stanley Works will buy Black & Decker in an all-stock $3.5bn transaction, creating an $8.4bn global hand-tool giant. Stanley will issue 1.275 shares to Black & Decker owners, representing a 22% premium to Monday’s closing stock price.

The deal gives Stanley Works’ shareholders 50.5% of the combined company. The New Britain, Connecticut based company will also name 9 of the group’s 15 directors. Stanley’s chief executive John F. Lundgren will remain in his position. Black & Decker’s chief of 24 years, Nolan Archibald, will be executive chairman of the combined group for three years.

The group says it will extract $350m of cost savings from the deal within three years. Deutsche Bank and Goldman Sachs advised Stanley. JPMorgan worked with Black & Decker.

“Joining these two companies together creates a powerful engine for growth, both as markets around the world recover and over the long-term”, said Lundgren.

• Black & Decker press release