Microchip Technology & ON Semi Propose To Acquire Atmel For $5.00 Per Share In Cash

October 02, 2008 by Jeff Shepard

Microchip Technology Inc. and ON Semiconductor Corp. announced that they have sent a proposal to the Board of Directors of Atmel Corp. to acquire Atmel for $5.00 per share in cash. The proposal, which is being led by Microchip, provides a premium of 52.4% to Atmel’s closing price of $3.28 on October 1, 2008, and values Atmel at $2.3 billion.

As the lead participant, Microchip would acquire Atmel in a cash merger (subject to Atmel’s potential desire for some common stock). The transaction would be financed with a combination of cash from Microchip and proceeds from the sale of certain Atmel assets to ON Semiconductor. With respect to the latter, ON Semiconductor would acquire the assets related to Atmel’s nonvolatile memory and RF and automotive businesses immediately prior to the merger closing. ON Semiconductor would finance its purchase using a combination of existing cash resources, borrowings under its existing credit facility and additional financing.

Although not a condition to the offer, Microchip intends to dispose of Atmel’s ASIC business upon completing the acquisition or shortly thereafter. Microchip is confident that it could divest the business and has engaged recently in discussions with a third party who has expressed interest in acquiring it.

In response, Steven Laub, President and Chief Executive Officer of Atmel, issued a letter to Atmel’s share holders stating, "Consistent with its fiduciary duties, Atmel’s Board of Directors will carefully review and consider Microchip’s and ON Semiconductor’s unsolicited proposal, with the assistance of its financial and legal advisors.

"As you know, we have made significant progress in transforming our company. Indeed, we believe Microchip Technology’s and ON Semiconductor’s interest in Atmel is largely due to the strong product portfolio, proprietary AVR architecture and leading technology solutions that you enjoy as a valued Atmel customer and partner."