Today’s Wall Street Journal (wsj.com) reports that Applied Materials (ticker symbol AMAT) has agreed today to acquire Varian Semiconductor Equipment Associates (VSEA) for $63 per share, roughly a 55% premium to yesterday’s closing share price of VSEA and assigning a market valuation to VSEA of approximately $3 billion. Applied will pay nearly 14 times Varian’s earnings before interest, taxes, depreciation and amortization, or Ebitda.

The transaction is one of the largest recent deals between companies that make equipment used in the manufacture of integrated circuits for electronic devices such as flat-screen TVs and solar panels. Applied Materials supplies the highly specialized equipment used in making these chips, which are built on silicon wafers and contain components such as transistors. Varian designs and makes ion-implantation systems, which are used to build the transistors that are the basis of these chips. Chip-gear makers also manufacture the equipment used to cut individual chips from wafers and help in assembling and testing them.

Betting that the demand for popular gadgets such as smart phones and energy-efficient technology will drive growth at a combined company, the chip-equipment makers are also expecting their chip-making customers to upgrade their manufacturing technology and capacity, driven by increasing demand for consumer gadgets. In January, Intel Corp. said it plans to spend $9 billion in capital expenditures this year, including for new equipment. Executives at Applied and Varian were both upbeat about the outlook for their industry during recent earnings calls.

Shares of Applied Materials are currently trading at $15.03, down 6% from their opening level today but only slightly down from yesterday’s close. Needless to say, VSEA shares gapped up from yesterday’s close of $40.55 to open today at $61.42 where they currently trade, up approximately 50%.