Semiconductor equipment maker Applied Materials Inc. (NASDAQ: AMAT) announced before markets opened on Tuesday that the company’s board has agreed to a merger with Tokyo-traded Tokyo Electron Ltd., another maker of semiconductor manufacturing equipment. The resulting company will be valued at $29 billion. The merger is expected to be completed in the second-quarter of next year, pending approval by shareholders of both companies and various regulators.

Under the terms of the agreement, shareholders in Tokyo Electron will receive 3.25 shares of the new company for each share they currently hold. Applied Materials shareholders will receive one share for each current share. After the deal closes, Applied Materials shareholders will own approximately 68% of the new company, and Tokyo Electron shareholders will own the remaining 32%.

Tokyo Electron’s chairman/CEO/president will serve as the chairman of the new company, and Applied Materials’ current president/CEO will be the new CEO. The new company will get a new name; maintain dual headquarters in Tokyo and Santa Clara, California; have dual listings on the Tokyo Stock Exchange and Nasdaq; and be incorporated in the Netherlands.

Applied Materials currently has a market cap of around $19 billion. Tokyo Electron carries a market cap near $9 billion. In its fiscal year ended in March, Tokyo Electron’s net income fell nearly 84% from the prior year and operating income fell nearly 80%. The company said it had about $2.4 billion in cash and short-term investments at the end of March, of which only about $860 million is cash.

The merger is billed as one of equals, but Applied Materials is the bigger dog. The deal is not unlike Micron Technology Inc.’s (NASDAQ: MU) acquisition of Japan’s Elpida Memory out of bankruptcy last year. We will never know now if that was to be the fate of Tokyo Electron, but the signs were pointing that way. Applied Materials may well have gotten a bargain here.

Shares of Applied Materials are up 6.3% in premarket trading Tuesday morning at $17.00, above the stock’s 52-week range of $9.95 to $16.78.

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