Atmel drops Dialog, says Microchip’s takeover bid is better
However Dialog would be well paid for its trouble. If Atmel abandons the previously agreed deal with Dialog it will be required to pay Dialog a termination fee of $137.3 million.
Dialog announced in September it had agreed a deal to buy Atmel for $4.6 billion in cash-and-stock in a move to try and capture a larger slice of the Internet of Things (IOT) market. The value of Dialog’s bid – $10.42 per Atmel share made up of $4.65 in cash and 0.112 of a Dialog American Depository Share based on Dialog’s closing stock price as of 18 September 2015 – has fallen with Dialog’s share price since then.
Microchip has offered $8.15 per Atmel share, consisting of $7.00 in cash and a fraction of a share of Microchip common stock having a value of $1.15.
Atmel notified Dialog on January 12 that it intends to terminate the Dialog agreement and enter into a merger agreement with Microchip. Dialog has up until 5:00pm California time on Tuesday January 19, 2016, to make a counter bid.
Microchip is one of few major microcontroller vendors without an ARM-based portfolio. It pioneered its own PIC microcontroller architectuture and more recently made use of MIPS at the 32bit level. Atmel would provide an ARM capability and the deal would appear far more strategic for Microchip than it does for Dialog. And thus it may well be that Dialog will pocket the $137 million and move on.
If so, Dialog CEO Jalal Bagherli, may be disappointed that this is the second major deal that has gone public that he has not been able to pull off. In 2014 Dialog was in discussions with AMS AG of Austria about a possible merger but the two companies were unable to agree terms.
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