The world's biggest chip maker, Intel, is to buy the security technology company, McAfee for $US7.68 billion in cash.
Under the terms of the deal, Intel said it would pay $48 per share in cash for McAfee, almost 60% higher than its closing price on Wednesday.
Through buying McAfee, Intel intends to build security features into its microprocessors which go into products such as laptops and phones.
The two companies said they had been working together for 18 months and their first new products would be revealed early next year.
The BBC reports both boards of directors have unanimously approved the deal.
McAfee's shares rose 58% to $US47.17. Intel shares, meanwhile, fell by 3.2% to $US18.97.