May 4 (Bloomberg) -- Applied Materials Inc., the world's largest producer of chipmaking equipment, agreed to buy Varian Semiconductor Equipment Associates Inc. for $4.9 billion in cash to add technology for chips used in mobile devices.
The company will pay $63 a share, 55 percent more than yesterday's closing price, Santa Clara, California-based Applied Materials said in a statement today. The merger was approved by the boards of directors of both companies, it said.
The deal is a bet on rising demand for chips used in smartphones such as Apple Inc.'s iPhone that allow consumers to surf the Web and also require energy-efficient technology. Applied Materials on Feb. 24 predicted second-quarter profit and sales that topped analysts' estimates.
Applied Materials is a "cyclical story" and the transaction may help the company to benefit from increased spending by semiconductor manufacturers, said Adrien Bommelaer, a London-based analyst at Matrix Corporate Capital LLP. "The addressable market is now very strong."