JERUSALEM, March 19 (Xinhua) -- The Israeli electronic start-up Orbotech Ltd. (Orbotech) is being bought by the California-based KLA-Tencor Corporation (KLA-Tencor) at a cost of 3.4 billion U.S. dolllars.

The two companies announced Monday that they had entered into a definitive agreement pursuant to which KLA-Tencor will acquire Orbotech for 38.86 U.S. dollars in cash and 0.25 of a share of KLA-Tencor common stock in exchange for each ordinary share of Orbotech, implying a total consideration of approximately 69.02 U.S. dollars per share.

The transaction values Orbotech at an equity value of approximately 3.4 billion U.S. dollars and an enterprise value of 3.2 billion U.S. dollars.

The current market cap of Orbotech, which specializes in developing and manufacturing electronics, including printed circuit boards, flat panel displays and semiconductors, is 2.9 billion U.S. dollars. The company was established in 1981 and has around 2,500 employees.

"This combination will open new market opportunities for KLA-Tencor, and expands our portfolio serving the semiconductor industry," said Rick Wallace, president and CEO of KLA-Tencor.

With this acquisition, KLA-Tencor will significantly diversify its revenue base and add 2.5 billion U.S. dollars of addressable market opportunity in the high-growth printed circuit board, flat panel display, packaging, and semiconductor manufacturing areas, according to the announcement.

"Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel," said Asher Levy, CEO of Orbotech.

The share repurchase program is targeted to be completed within 12 to 18 months following the close of this transaction.

The transaction has been approved by the Board of Directors of each company and is expected to close by the fourth quarter of calendar year 2018.