KLA-Tencor Corp. (Nasdaq: KLAC) agreed to acquire Orbotech Ltd. (Nasdaq: ORBK), an Israeli firm that develops ways to enhance manufacturing of electronic products, to diversify its sources of growth.

KLA will buy Orbotech for about $69.02 per share through a combination of cash and stock, according to a statement. That gives Orbotech an equity value of approximately $3.4 billion and represents a 15 percent premium over Friday’s closing price in New York.

“This acquisition is consistent with our strategy to pursue sustained, profitable growth by expanding into adjacent markets," Rick Wallace, KLA’s chief executive officer, said in the statement. “Our companies fit together exceptionally well in terms of people, processes, and technology.”

Israeli Prime Minister Benjamin Netanyahu, an evangelist for Israeli technology on his foreign travels, praised the deal.

“More good news for the hi-tech sector and the Israeli economy!” he said on his Twitter feed. “I was happy to hear that the company, which employs 2,500 people, will continue to operate” from the Israeli city of Yavne, rather than moving its operations overseas.

Total cost synergies from the deal are expected to be $50 million, reached within two years following the closing of the deal. The transaction will be “immediately accretive” to KLA’s revenue, adjusted earnings and free cash flow, the statement said. The deal is expected to close before the end of 2018.

The deal “is further proof of Orbotech’s positioning in the markets in which it operates and the strength of its business model,” Orbotech CEO Asher Levy said. “The agreement between the companies significantly strengthens the chances of the joint company to successfully cope with the large investment waves expected in the coming years in the world of electronics.”

KLA, a semiconductor manufacturer based in Milpitas, California, also said it will repurchase $2 billion of its own shares. The company will fund the acquisition and stock buyback with cash on hand and proceeds from a $1 billion sale in new long-term debt.

JPMorgan Chase & Co. (NYSE: JPM) acted as exclusive financial advisor to KLA-Tencor, while Barclays plc served the same role for Orbotech.