Audio technology developer DTS Inc. will be acquired by a Silicon Valley company in a deal valued at $850 million.

The Calabasas firm is being bought by Tessera Technologies Inc., in San Jose, in an all-cash deal at $42.50 a share. The transaction is expected to close at the end of the year or early next year.

DTS Chief Executive Jon Kirchner said the transaction brings substantial and immediate value to shareholders.

“We believe that as part of Tessera we will be in a unique position to deliver the world’s leading audio and imaging solutions to all of our key markets and drive meaningful value for our combined customers, partners and employees,” Kirchner said in a prepared statement.

DTS was founded in 1993 and its initial products were for digital multi-channel audio in movie theaters before transitioning to serve the home entertainment and vehicle markets. Revenue for the quarter ending June 30 totaled about $48.7 million.

Tessera started in 1990 making semiconductor packaging and later expanded into image and video enhancement and analysis. Its revenue for the second quarter ending June 30 was $62 million.

Shares closed up $7.91, or more than 23 percent, to $42.24 on the Nasdaq.