Dialog Semiconductor PLC’s shares slumped 19 percent after the chipmaker unveiled a cash-and-stock deal to buy rival Atmel Corp, reducing the value of its offer and raising the chances that another potential buyer might step in with a counterbid.
Reading, England-based Dialog is proposing US$10.42 per share for Atmel — US$4.65 in cash and 0.112 of a Dialog American depositary share for each stock. Monday’s decline reduces the bid to about US$9.26 per share.
“There was very significant interest for the company,” Atmel CEO Steven Laub said on a conference call following the announcement.
He did not identify any other bidders. The agreement prior to the share slide values Atmel at US$4.6 billion.
The chip industry is in the middle of a record year for mergers and acquisitions, as companies look to add scale to cope with slowing growth and increasing costs. Atmel, which makes chips used in the automotive industry and in industrial equipment, was also approached by China Electronics Corp (中國電子), people familiar with the process said.
“Atmel’s a worthwhile asset and people were interested,” Topeka Capital Markets Inc analyst Suji De Silva said. “Those bids might come back into the money.”
Shares of Dialog, which supplies chips used in Apple Inc’s iPhone and iPad, fell to 36.75 euros at the close in Frankfurt, Germany, the steepest decline since April 2006, placing the company’s market value at 2.9 billion euros (US$3.2 billion).
Atmel rose 13 percent to US$8.19 at the close in New York.
“What’s happened to the acquirer’s stock today in Europe increases the chances that there will at least be speculation that one of the other bidders that was interested in Atmel might return,” FBN Securities Inc strategist Keith Moore said. “Clearly, the move in the stock has made the offer worth a lot less.”
Investors consider Dialog’s offer for Atmel to be too high, requiring debt and new stock to finance the bid. The deal places a 43 percent premium on San Jose, California-based Atmel, based on the stock’s closing price on Friday.
Strategic buyers on average paid a premium of 19 percent in comparable chip-industry transactions in the past 12 months, Bloomberg data show.
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