CHICAGO (AP) — Tool makers Stanley Works and Black [&] Decker Corp. are betting that together they can wring out more profit and better position themselves for a housing market recovery than they could apart.

Battered by the housing slump and economic recession, two of the industry’s most iconic brands are now merging. Stanley Works on Monday agreed to pay $3.46 billion for rival Black [&] Decker in an all-stock deal that will create the nation’s largest tool maker.

The deal will cut costs by $350 million within three years, likely in part through job cuts, and increase earnings per share by $1 within three years, the companies said. Executives said most of the savings will come from reducing corporate overhead and consolidating business units and manufacturing, distribution and purchasing.

There is little overlap in the companies’ products, said James C. Lucas, managing director of Janney Montgomery Scott LLC. Stanley is a leader in consumer and industrial hand tools and security, while Black [&] Decker holds a top position in power tools.

Stanley Works’ brands include its Stanley tools line and FatMax, Bostitch and Mac Tools, which are used on cars. In addition to its namesake line, Black [&] Decker owns DeWalt, Porter-Cable, Kwikset and Baldwin brands, which are popular with both consumers and professionals.