SAN JOSE -- Agilent Technologies has entered into an agreement to acquire Varian Inc. for $1.5 billion in cash.

The deal is expected to be completed by year-end. Agilent will pay $52 per share in a deal, a 35% premium to Varian's July 24 closing price.

In a press release, Agilent said the purchase could generate $75 million in annual cost savings, and should yield a 20% return on investment capital within four to five years.