Dialog Semiconductor to buy Atmel for $4.6bn

LONDON (ShareCast) - (ShareCast News) - Shares in Dialog Semiconductor fell sharply after the company announced on Sunday that it has agreed to acquire US semiconductor manufacturer Atmel Corp in a cash and stock deal worth around $4.6bn, which is more than its own market value. The deal is expected to be accretive to Dialog's underlying earnings in 2017, the first full year following closing, and the company expects to achieve projected annual cost savings of $150m within two years.

Under the terms of the transaction, due to close in the first quarter of 2016, Atmel shareholders will receive $4.65 in cash and 0.112 of a Dialog American depository sharesfor each Atmel common share held at close of the transaction, which is the equivalent of $10.42 per Atmel share based on Dialog's closing price last Friday.

Dialog, which is headquartered in Reading but listed on the Frankfurt Stock Exchange, said it will fund the transaction through a combination of existing cash, $2.1bn of new debt and the issuance of 49m ADSs to be listed in New York.

Chief executive officer Jalal Bagherli said: "By bringing together our technologies, world-class talent and broad distribution channels we will create a new, powerful force in the semiconductor space. Our new, enlarged company will be a diversified, high-growth market leader in Mobile Power, IoT and Automotive.

"We firmly believe that by combining Power Management, Microcontrollers, Connectivity and Security technologies, we will create a strong platform for innovation and growth in the large and attractive market segments we serve. This is an important and proud milestone in the evolution of our Dialog story." At 1035 BST, Dialog shares were down 17.3% at €37.46, while Atmel shares were up a whopping 26.5% at $9.20 in pre-market trade.