Semiconductor firm Lam Research Corp. said Wednesday it is buying KLA-Tencor Corp. in an agreed deal that values KLA-Tencor at $67.02 a share, or $10.6 billion.

On the deal's closing, the combined company will have $8.7 billion in pro forma annual revenue, Lam said. The deal is also expected to be accretive to Lam's non-GAAP earnings and free cash flow per share during the first 12 months post-closing, it added.

The combined company expects to realize $250 million in annualized cost synergies within 18 to 24 months and to generate $600 million in incremental annual revenue by 2020 through improved differentiation of each company's products and the creation of new capabilities, it added.

Under the deal, accepting KLA-Tencor stockholders will get $32.00 in cash and 0.5 of a share of LAM Research common stock. They can accept either all-cash, all-stock, or a mixed consideration.

Write to Ian Walker at ian.walker@wsj.com

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(END) Dow Jones Newswires

October 21, 2015 05:45 ET (09:45 GMT)

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