Scientific instrument maker Agilent Technologies has decided to acquire Palo Alto-based Varian Inc for $1.5 billion in cash.

Under terms of the acquisition, Agilent will pay $52 per share, representing a 35% premium to Varian's closing price last Friday.

Agilent said the acquisition expands its product line in the areas of life sciences, environmental, energy and materials and strengthen its consumables portfolio, among other advantages. The company expects to see US$75mn in annual savings from the combination.

Santa Clara, Calif.-based Agilent specializes in testing and measurement equipment that, in addition to being used in biosciences, is also used in the communication, electronics and chemical-analysis markets.

The deal is expected to be completed before the end of 2009.