Consumer goods maker Spectrum Brands Holdings Inc. plans to merge with HRG Group Inc., a holding company and Spectrum's largest shareholder, in a deal worth $10 billion, the companies said Feb. 26.

Under the deal, Spectrum shareholders will receive 1 share in the new company for each Spectrum share, the companies said in a statement. HRG shareholders will receive in the aggregate a number of shares of the combined company equal to the number of shares of Spectrum Brands currently held by HRG, subject to a $200 million upward adjustment and other financial adjustments to account for HRG's net debt and transaction costs, the companies said.

HRG owns about 59.3% of the company's outstanding shares, according to S&P Capital IQ. That stake, worth about $3.56 billion, is HRG's largest public holding.

The swap will be tax-free, according to the companies, which said they expect the deal to close by the second quarter of the 2018 calendar year.

Once the deal closes, Spectrum's current slate of executives will head the combined company, with its board of directors replacing HRG's board. Meanwhile, Ehsan Zargar will resign from the board of Spectrum Brands and be replaced by an independent director to be selected by Leucadia National Corp., HRG's largest shareholder, the companies said.

Shares of the Middleton, Wis.-based Spectrum, which manufactures Rayovac batteries and Hot Shot insecticides, were up 3.1% at $106.78 each in morning trading, while HRG shares were 4.4% higher at $16.60. The companies announced the deal before U.S. markets opened Feb. 26.