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Orbotech Ltd. (NASDAQ: ORBK) saw its shares make a handy gain to start the week, after it was announced that KLA-Tencor Corp. (NASDAQ: KLAC) had entered into a definitive agreement to acquire the firm.

The transaction values Orbotech at an equity value of approximately $3.4 billion and an enterprise value of $3.2 billion. This is a cash and stock deal, in which KLA-Tencor will acquire Orbotech for $38.86 in cash and 0.25 of a share of KLA-Tencor common stock. The deal implies a total consideration of roughly $69.02 per share.

With this acquisition, KLA-Tencor will significantly diversify its revenue base and add $2.5 billion of addressable market opportunity in the high-growth printed circuit board, flat panel display, packaging and semiconductor manufacturing areas.

Total cost synergies are expected to be approximately $50 million on an annualized basis within one to two years following the closing of the transaction. It is expected to be immediately accretive to KLA-Tencor’s revenue growth model, earnings and free cash flow per share.

Additionally, KLA-Tencor announced a $2 billion share repurchase authorization. The share repurchase program is targeted to be completed within 12 to 18 months following the close of this transaction.

Rick Wallace, president and CEO of KLA-Tencor, commented:

This acquisition is consistent with our strategy to pursue sustained, profitable growth by expanding into adjacent markets. This combination will open new market opportunities for KLA-Tencor, and expands our portfolio serving the semiconductor industry. Our companies fit together exceptionally well in terms of people, processes, and technology. In addition, KLA-Tencor has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region.

The transaction has been approved by the board of directors of each company and is expected to close before the end of calendar year 2018. It is still subject to approval by Orbotech’s shareholders and other customary closing conditions.

Shares of Orbotech were last seen up about 7% at $64.19, with a consensus analyst price target of $60.71 and a 52-week trading range of $30.25 to $65.75.

KLA-Tencor shares were recently trading down nearly 3% at $117.36, with a consensus price target of $126.64 and a 52-week range of $87.93 to $123.96.