In a statement, Dialog said it would pay $4.65 in cash and 0.112 of a Dialog Semiconductor American Depository Share (ADS) for each Atmel share. “We firmly believe that by combining power management, micro controllers, connectivity and security technologies, we will create a strong platform for innovation and growth in the large and attractive market segments we serve”, Jalal Bagherli, Dialog’s CEO, said.
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The acquisition of Atmel allows Dialog Semi to take advantage of Atmel’s established sales channel, allowing it to diversify its customer base, according to the press release. Post transaction, it is projected that Atmel shareholders will own approximately 38 percent of the combined company. Atmel actually has more employees than its acquirer-5,000 to about 1,500, Mr. Bagherli estimated-which he attributed to Atmel operating factories to manufacture some of its chips.
The combined company is looking to become a leader in the mobile power, IoT and automotive sectors.
Major deals in the sector have included Avago Technologies Ltd’s $37 billion acquisition of Broadcom Corp in May as well NXP’s announcement in March to buy USA peer Freescale Semiconductor for $17 billion.
On Friday, stock in Dialog filled at 45.325 dollars each, despite the fact that Atmel imparts filled at seven dollars.27.
Dialog is a “fabless” company, meaning it does not operate any manufacturing plants, and instead contracts the production of its chips to other companies.
Dialog said the transaction should close by the first quarter of 2016, boosting the company’s earnings in 2017 with annual cost savings of an expected $150 million to result within two years of closing.
Bloomberg also reported that the price is 43 percent more than Atmel’s last closing price.
Dialog, based near London in Reading, traces its lineage to 1981 and the European operations of a US company called global Microelectronic Products Inc.
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Atmel, founded in 1984, gets about 70% of its revenue from microcontrollers. Merger talks with Austria’s AMS AG fell apart previous year .
