Atmel Receives Buyout Offer That May Top Dialog's Merger Bid

  • Board says it will engage in talks with unsolicited bidder
  • Company continues to support takeover deal with Dialog

Atmel Corp., which agreed in September to be acquired by Dialog Semiconductor Plc, said it received an unsolicited bid of $9 a share in cash that may top the Dialog deal.

The San Jose, California-based chipmaker said it determined the new offer “would reasonably be expected to result” in a deal superior to Dialog’s proposal under the merger agreement. Dialog had agreed to pay $4.65 in cash and 0.112 of a Dialog American depository receipt for each share of stock, making its offer about $8.81 a share, based on current prices. As a result of the new bid, Atmel’s directors will engage in buyout talks with the potential acquirer, the company said in a statement Friday.

Dialog last month received approvals from German and U.S. authorities for the Atmel acquisition. Activist hedge fund Elliott Management Co. has been fighting the deal, saying it would destroy Dialog’s shareholder value. Dialog’s stock has declined 27 percent since the merger with Atmel was announced Sept. 20.

Board Backs Dialog

Atmel’s board said it was advising against the unsolicited new offer and there was no assurance the bid would result in a deal. The directors continued to recommend shareholders back the merger with Dialog, which remains in effect. Atmel’s shares gained as much as 8.7 percent to $9.20 in extended trading in New York after Friday’s announcement.

Dialog, based in Reading, England, makes chips used in Apple Inc.’s iPhone and iPad. It sought Atmel to reduce its reliance on mobile phones and gain complementary products for the automotive industry and that power the Internet of Things. The announced deal was part of a record year for semiconductor acquisitions, as chipmakers seek to counter slowing growth and increasing costs. The mergers also reflect the increasing technology being used to connect homes, cars and appliances to the Web.

Atmel said in August it was considering strategic options. Dialog Chief Executive Officer Jalal Bagherli said the company had to compete with other bidders to win Atmel.

Qatalyst Partners is acting as financial adviser to Atmel, and Jones Day is acting as the company’s external legal adviser, the company said.

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