The Stanley Works and The Black & Decker Corp. have entered into a definitive merger agreement to create Stanley Black & Decker, an $8.4 billion global industrial leader in an all-stock transaction valued at approximately $4.5 billion.

Under the terms of the transaction, which has been approved by the boards of directors 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, October 30, 2009. Upon closing, which is expected 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 nine members of Stanley’s current board of directors will be joined by six new members from Black & Decker’s board.

Stanley’s John F. Lundgren will be president and continue as CEO of the combined company. Nolan D. Archibald, chairman, president, and CEO of Black & Decker will be executive chairman of the combined company for three years.

“While we are pleased with the initial premium of approximately 22 percent, 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. “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. Joining forces with Stanley brings together two world-class companies with rich histories and strong track records in a one-of-a-kind opportunity to create outstanding benefits for our respective shareholders, customers and employees.”