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What: Shares of Novellus Systems (Nasdaq: NVLS) are surging today, up by as much as 22%, after it announced it is being acquired by Lam Research (Nasdaq: LRCX).

So what: Lam is acquiring Novellus in an all-stock deal valued near $3.3 billion where Novellus shareholders will receive 1.125 shares of Lam for each Novellus share held. The deal represents a 28% premium over yesterday's close for Novellus.

Now what: The combined company expects to realize roughly $100 million in cost synergies on an annualized basis by the fourth quarter of 2013, and Lam also announced a $1.6 billion stock repurchase program. Lam expects the deal to be accretive to non-GAAP earnings within a year of closing. Lam's leadership in etch and single-wafer cleaning equipment will combine well with Novellus' thin-film deposition and surface preparation technologies, and the combined company hopes to lead the industry's critical technology transitions.

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