Applied Materials (AMAT) inked a $4.9 billion all-cash deal on Wednesday to take over rival chip equipment maker Varian Semiconductor Equipment (VSEA) in a transaction that carries a 55% premium.

Santa Clara, Calif.-based Applied Materials agreed to pay $63 for Varian, which makes equipment used for chips installed in popular gadgets. The offer price is 55% above Varian’s close of $40.55 on Tuesday.

Applied sees Varian’s ion implant products as a way to boost its own offerings and potentially enter into adjacent markets like solar, display and light emitting diodes.

“The pace of product innovation is accelerating, requiring devices that are more mobile, more connected and more personalized,” Applied CEO Mike Splinter said in a statement. “Combined, Applied and Varian will be better positioned to help our customers solve these complex challenges and deliver long-term value to shareholders."

After the deal closes, the companies said Varian will operate as a division of Applied’s Silicon Systems Group and continue to be based in Gloucester, Mass. The addition of Varian is expected to add to Applied’s bottom line on a non-GAAP basis in the first year.

Applied Materials said it plans to pay for the deal with existing cash on its balance sheet and new debt. The company, which has an undrawn $1 billion revolving credit facility, already has a commitment for a one-year senior bridge loan worth $2 billion and plans to arrange long-term financing.

"In addition to our combined strengths in the semiconductor space, Applied's proven capability to extend its technology to adjacent markets like solar and display can help unlock the tremendous potential of ion implantation in these markets,” said Varian CEO Gary Dickerson.

Shares of Varian surged 51.57% to $61.46 ahead of Wednesday’s opening bell, while Applied Materials jumped 4.72% to $15.96.

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