Shares of U.S. semiconductor manufacturer InvenSense Inc. (INVN) are trading up over 17% at a price of $12.72 on Wednesday morning after news that it has agreed to be acquired by Japanese chipmaker TDK Corp. The San Jose, Calif.-based company provides micro-electromechanical systems (MEMS) sensors to clients such as smartphone manufacturers Apple Inc. (AAPL) and Samsung Electronics. The firm will be acquired in a deal worth $1.3 billion.

TDK’s offer is worth $13 per share in cash, representing an approximate 20% premium to InvenSense’s closing price on Tuesday of $10.84 per share. Reports of the deal follow news earlier this month suggesting TDK offered $12 per share to acquire the tech firm. (See also: InvenSense Shares Soar as TDK Makes an Offer.)

TDK to Boost its Presence in the Sensor Business

As major chip players strategize to lead in emerging spaces such as the Internet of Things (IoT), cloud and data center, the industry has experienced a surge of M&A activity.

InvenSense, as a supplier of motion- and rotation-tracking gyroscopes, has a strong presence in the smartphone market. Tokyo-based TDK, which has expanded its business into batteries, automotive components and IoT tech, will use InvenSense to bolster its sensor business.

“We aim to become a strong player in the sensor business with InvenSense as our perfect partner,” stated TDK CEOShigenao Ishiguri in a statement.

CEO’s Pay to Stay Plan

InvenSense’s CEO Behrooz Abdi will receive $1 million retention bonus to stay at the combined entity through the anniversary of the close of the merger agreement or the deal’s completion, whichever comes later, according to a regulatory filing. Upon that time, 20% of Abdi’s outstanding equity awards will vest early. The U.S. chipmaker’s CEO is also able to earn up to $3.43 million in cash if he remains with InvenSense through March of 2019 and the firm meets financial targets in the two proceeding years, reports Bloomberg.

Bank of America Merrill Lynch will serve as TDK’s exclusive financial adviser and Qatalyst Partners is advising InvenSense.