NEWP Newport Corp.

MKS Instruments Inc. said Tuesday that it would acquire Newport Corp. for $897 million in cash, a move to expand its presence beyond its core semiconductor business.

Newport shareholders will receive $23 a share, representing a 53% premium over Monday's closing price and valuing the company at a 14-year high.

Andover, Mass.-based MKS provides instruments that measure and control steps along the manufacturing process for products such as semiconductor devices and flat-panel displays. Newport, based in Irvine, Calif., is also a supplier of technology products and services customers across the microelectronics, health sciences and industrial manufacturing markets. The company's shares soared during the turn of the millennium, hitting a high of about $192 a share before collapsing with the tech bubble's burst. This year, shares are down about 5% and closed at $15.04 on Monday.

The combination creates a supplier of "critical components and subsystems for a diverse set of growing end markets," said MKS Chief Executive Gerald Colella, who called the deal consistent with the company's strategy of expanding into adjacent markets while increasing its footprint in the semiconductor business.

The companies said the deal will close in the second quarter and MKS expects the acquisition to add to earnings within the first 12 months post-completion. MKS also said the deal would shave $35 million off annual costs within three years of completion.

Newport is on the hook for $32.6 million in termination fees if the deal doesn't close.

Newport shares climbed 51% in premarket trading, to $22.77. Shares in MKS were inactive.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

February 23, 2016 09:35 ET (14:35 GMT)

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