Microchip maker Intel is buying chip designer Altera in a deal worth about $16.7bn (€15.25bn).
The deal comes after an earlier round of talks between the two companies ended in April. The transaction is just the latest in ongoing consolidation within the industry that is aimed at boosting revenue and profit.
Altera Corp stockholders will receive 54 US dollars (£34) per share, an 11% premium to the San Jose, California-based company's closing price of 48.85 US dollars on Friday.
The acquisition would likely be the biggest in Intel Corp's 47-year history.
Intel, based in Santa Clara in California, is the world's largest maker of PC chips and sells most of the chips used in servers, a much more profitable product.
Altera is attractive because it makes chips used in phone networks and cars.