What happened

Shares of Electro Scientific Industries (NASDAQ:ESIO) rocketed higher on Tuesday after the company announced alongside its second-quarter results that it had agreed to be acquired. The stock was up about 88.8% at 12:20 p.m. EDT.

So what

Electro Scientific announced that it had signed a definitive agreement to be acquired by MKS Instruments (NASDAQ:MKSI) in an all-cash transaction valued at approximately $1 billion. MKS will pay $30 for each share of Electro Scientific.

A notepad drawing of a fish eating a smaller fish.

Image source: Getty Images.

The combined company will have about $2.2 billion in pro-forma annual revenue, and MKS expects the transaction to be accretive to non-GAAP earnings and free cash flow within 12 months of closing. Annualized cost synergies of $15 million are expected within 18 to 36 months.

Electro Scientific also announced its second-quarter results. Revenue was $85.9 million, and non-GAAP earnings per share were $0.59, up 21% and 51.3%, respectively. Both numbers came in ahead of analyst expectations.

Now what

"We believe the ESI acquisition will help us deliver on one of our long-term strategic objectives, which is to broaden our base as a technical solutions provider to additional customers and markets," said MKS CEO Gerald Colella.

The deal is expected to close in the first quarter of 2019, pending regulatory and shareholder approvals. Electro Scientific cancelled its previously scheduled earnings call due to the transaction.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.