Venerable retailer Canadian Tire Corp. Ltd. (TSE:CTR.A)is buying Mark's Work Wearhouse (TSE:MWW)for $116 million in cash, the companies said Wednesday morning.

The deal values Mark's at $4.10 per share. Mark's last traded Tuesday at $3.30. The stock's one-year high is $3.60.

When Mark's stock resumed trading on Wednesday following the announcement it shot up more than 22 per cent. The stock closed up 75 cents at $4.05.

Shares of Canadian Tire were down on the news. The company's A class shares slipped $1.85 to $25.65.

Mark's will be run as a stand-alone retail division of Canadian Tire, and will continue to be led by Garth Mitchell as president, reporting to Wayne Sales, the president and CEO of Canadian Tire.

"Both Mark's Work Wearhouse and Canadian Tire are unique in the marketplace with a customer offering focused on goods for everyday use," Sales said in a release.

"This is a strong strategic and financial fit. The combination of Canadian Tire's hard goods expertise and Mark's work and work-related casual apparel and footwear expertise, targeting common customer segments, will provide tremendous opportunities to leverage the strengths of both organizations," said Sales.

Canadian Tire said the deal is expected to increase its earnings and cash flow in 2002. The company said the merger will also help it save $5 to $7 million on transportation, real estate and advertising costs.

The two companies said they have a strategic fit, including a close match in demographics, particularly customers in the 25 to 59 age range. Canadian Tire also believes cross-merchandising opportunities exist between the two firms.

Mark's can also save money through the use of Canadian Tire's "core capabilities" including real estate, Canadian Tire money, financial services and advertising, the companies said.

Mark's operates 325 corporate and franchisee stores across the country. On Dec. 11, the company reported a third-quarter profit of 1 cent a share, down 71 per cent from the same quarter of last year. The company cited the weak economy and unusually warm weather for the earnings drop.

Mark's acknowledged in early October that it was in takeover talks with a potential buyer.

The board of directors of Mark's has already approved the takeover, which is still conditional on at least two-thirds of Mark's shareholders accepting Canadian Tire's bid.

The deal is expected to close next February. Mark's has agreed to $6 million break-up fee if the deal is called off.