Microchip Said to Be Reconsidering Offer to Acquire Atmel

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  • Target's disappointing quarterly sales said to raise concerns
  • Atmel already has binding deal to be bought by Dialog

Microchip Technology Inc. is reconsidering its interest in Atmel Corp. after Atmel’s business struggled in the fourth quarter, according to a person with knowledge of the situation.

Atmel, based in San Jose, California, received an unsolicited offer from an unnamed buyer in December, according to a statement at the time. That suitor was Microchip, according to two people familiar with the matter, who asked not to be identified because the information is private.

Atmel, which has said revenue will be $266 million to $286 million in the fourth quarter, is likely to report results at the low end of that range, the person said. As a result, Microchip is rethinking its current $9-a-share offer, which values Atmel at about $3.8 billion, the person said. 

Microchip hasn’t made a final decision, and the offer may still go ahead as planned, they said. Options for Microchip could include rescinding or lowering its bid.

Representatives for Atmel and Microchip declined to comment.

In September, Atmel agreed to be acquired by Reading, England-based Dialog Semiconductor Plc. At the time, the bid -- $4.65 in cash and 0.112 of Dialog’s American depository shares -- valued Atmel at about $4.6 billion, or $10.42 a share.

Dialog’s Europe-traded stock has plummeted more than 35 percent since the agreement was announced on Sept. 20 through Wednesday, pushing the value of the transaction down to $3.4 billion, or $8.12 per Atmel share. It fell a further 7 percent on Thursday, valuing the company at about 2.1 billion euros ($2.3 billion).

Atmel fell to $8.02 in at 9:43 a.m. in New York, giving the company a market value of $3.4 billion. Microchip fell 1 percent to $44.48, for a market value of $9 billion.