NEW YORK (CNNMoney.com) -- Pulte Homes has agreed to acquire Centex Corp. - creating the nation's largest homebuilding company - in a stock transaction worth $3.1 billion, including $1.8 billion of debt.

Under the merger agreement announced Wednesday, Centex (, ) holders will get 0.975 share of Pulte (, ) common stock for each share they own. Based on Tuesday's prices, the deal values Centex shares at $10.50 each, a nearly 38% premium from Centex's $7.62 close ().

Shares of Centex rose $1.62, or 21%, to $9.24, while Pulte stock slid 89 cents, or 8%, to $9.88 in early Wednesday trading.

The companies said that, after the merger, Pulte shareholders will own 68% of the combined company, and Centex shareholders will own 32%.

The two companies said they each have about $1.7 billion in cash, so that the newly combined company will have more than $3.4 billion in liquidity.

"Combining these two industry leaders with proud legacies into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability," said Pulte President and Chief Executive Officer Richard J. Dugas, Jr. in a written statement.

The combined company will use the Pulte name, with Dugas becoming chairman, president and CEO. Centex Chairman and Chief Executive Officer Timothy Eller will be vice chairman. The new company will be based in Pulte's home of Bloomfield Hills, Mich.

The merged company will reach into 59 markets, including 29 states and the District of Columbia.

"The combination will also allow us to capitalize on the opportunities presented by the addition of Centex's land positions to Pulte's, including Centex's sizable holdings in both Texas and the Carolinas, two areas that continue to exhibit strength in the face of today's difficult housing market," said Dugas.

The companies said they had a combined 39,000 closings last year. But the current recession has hit the housing market hard, with less credit available to fund home building and fewer consumers looking to build.

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