Atmel Rejects Unsolicited Proposal From Microchip & ON Semi
Atmel Corp. announced that, after careful consideration, its Board of Directors has unanimously determined that the October 1, 2008, unsolicited proposal from Microchip Technology Inc. and ON Semiconductor Corp. is inadequate in multiple respects, including value, conditionality and complexity, and is not in the best interests of Atmel’s stockholders.
"Atmel’s Board has determined that Microchip and ON’s highly conditional proposal significantly undervalues Atmel and would deprive Atmel stockholders of the greater value that can be achieved through the continued execution of the Company’s transformation plan," said David Sugishita, Chairman of Atmel’s Board of Directors.
Steven Laub, Atmel’s President and Chief Executive Officer, commented, "Atmel’s Board and management are committed to enhancing stockholder value. This commitment has driven the decisive actions we have taken to improve and restructure nearly every aspect of Atmel’s operations. These initiatives are well underway and are just beginning to unlock the value inherent in Atmel. Indeed, our outstanding third quarter results announced today demonstrate the clear progress we are making. We will continue to take all appropriate steps, including selling or shutting down those businesses that do not meet our financial or strategic objectives, to ensure that we build on this momentum and realize Atmel’s full potential."
Following are some excerpts from the text of the letter that was sent today to Steven Sanghi, Chairman, President and Chief Executive Officer of Microchip Technology, and to Keith Jackson, President and Chief Executive Officer of ON Semiconductor:
"We received your unsolicited, non-binding public proposal dated October 1, 2008, to engage in negotiations for a three-way agreement to acquire Atmel for $5.00 per share in cash, subject to numerous conditions, including the sale of assets, due diligence and financing. After a comprehensive review, and with advice from our outside financial and legal advisors, Atmel’s Board of Directors has concluded that your proposal is inadequate in multiple respects – it significantly undervalues Atmel, is unacceptably conditional and subject to significant execution risk.
"We believe it is important to set the record straight with respect to our discussions with you prior to October 1, 2008. Despite your claims, Microchip never made a proposal to Atmel prior to its October 1 unsolicited proposal. You also falsely stated during your joint investor call that we told you that "the Board of Atmel did not want to do this deal under any circumstances, under any terms, at this time." What we both know really occurred is that Microchip sought confidential and sensitive due diligence information for a possible multi-party transaction without specifying a price or any other terms. Your publicly announced October 1 proposal was the first time Microchip disclosed to us a proposed price, structure, ON Semiconductor’s involvement, and the many significant associated conditions, including the financing required by ON. Atmel’s Board takes its fiduciary duties seriously. Given the risks, uncertainties and competitive issues of your approach, we believe the interests of Atmel’s stockholders, employees and customers will be better served by continuing to pursue our transformation plan that we expect will generate substantially greater stockholder value.
"Microchip and ON’s proposal is clearly an opportunistic attempt to acquire our leading technology and product portfolio at a time of value compression in the equity markets and just as our progress is becoming more visible in the company’s financial results. Simple calculations show that your proposal significantly undervalues the company. Based on the value that ON has ascribed to Atmel’s RF/Auto and non-volatile memory business units, Microchip would be acquiring Atmel’s microcontroller business at a substantial discount to its true value, despite accelerating revenue growth, market share gains and margin expansion. As stated in your joint investor call "Atmel has strong momentum in proprietary AVR architecture." In your joint investor presentation, you identified "Significant opportunities to drive operational synergies across COGS, SG&A and R&D." However, the proposal fails to provide any value to Atmel stockholders for the substantial synergies that you anticipate achieving."