Microchip to buy Atmel Corp for $3.6 bn

20 Jan 2016

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US chipmaker Microchip Technology yesterday struck a deal to buy Atmel Corporation for about $3.6 billion, the latest of mergers and acquisitions within the semiconductor industry.

The agreed deal will see Atmel terminate its agreement with Dialog Semiconductor and pay the termination fee of $137.3 million.

Atmel investors will get a higher proportion in cash per share in the Microchip deal compared with the Dialog deal, Steven Laub, president and chief executive of Atmel, said in a statement. Laub also said that there would be ''opportunity for further upside'' through Microchip's stock.

Under the terms of the deal, Microchip is offering to pay $7 per share in cash and $1.15 per share in stock.

The Dialog deal announced in September entailed $4.65 in cash and 0.112 of Dialog's American depositary shares for each share of Atmel (See: Dialog Semiconductor to buy US peer Atmel for $4.6 bn).

Microchip said that it fund the transaction through $2.175 billion cash in hand, $786 million cash from its existing line of credit and $485 million in Microchip stock.

The transaction is estimated to create $170 million in cost savings and revenue growth from April 2018.

''Atmel  stockholders will receive a much higher cash consideration per share compared to the Dialog deal, as well as the opportunity for further upside through the ownership of stock of Microchip,'' said Steven Laub, president and CEO of Atmel.

Atmel designs and manufactures microcontrollers, capacitive touch solutions, advanced logic, mixed signal, nonvolatile memory and radio frequency components.

Atmel provides the electronics industry focused on the industrial, automotive, consumer, communications and computing markets.

Arizona-based Microchip provides microcontroller, mixed signal, analog and Flash IP solutions to thousands of diverse customer applications worldwide.

Chip makers have recently been merging in order to cut costs amid fierce competition and declining sales.

In 2013, Microchip acquired Brussels-based EqcoLogic for an undisclosed amount and a year later acquired Supertex for $394 million in May this year acquired Micrel for $840 million, while Avago Technologies proposed to buy Broadcom for $37 billion.

 

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