The stock price of Atmel Corporation (NASDAQ:ATML) jumped more than 12% on Monday after rival firm Dialog Semiconductor agreed to acquire the company in a deal valued at $4.6 billion. The stock closed at $8.19 with gains of 12.65% on share volume of 17,540.
The significance
The acquisition of Atmel Corporation is continuation of a trend of merger and acquisition deals in the semiconductor industry. For record, so far, 2015 has been the biggest year for semiconductor M&A since year 2000. Last month, the CEO Steven Laub reported that he would be postponing his retirement as Atmel worked to conclude a strategic review, and the stock price jumped at that time due to speculation of imminent acquisition.
The deal details
The ATML stock declined last week after a report stated that China Electronics was in discussion to acquire the company in a deal valued at $8.50 per share, below the 52-week high of stock. The Dialog agreement, which will see company’s shareholders get $4.65 in cash and 0.112 of a Dialog depository share for each Atmel share, values company’s stock at $10.42, close to the 52-week high mark. Dialog intends to fund the acquisition with cash and debt, and nearly 49 million American depository shares. As the deal completes, the shareholders of Atmel will own 38% of the new entity.
The expectations
Dialog expects the acquisition of Atmel Corporation (NASDAQ:ATML) to complete in the first quarter of next year, with annual cost savings realized in the next two years following acquisition year. This deal enables Dialog to diversify into the industrial and automotive industries, reducing its dependence on major Smartphone customers. For Atmel shareholders, this acquisition agreement looks better than the hyped China Electronics agreement. The stock price of Atmel peaked in the month of June, and prior to that, the stock had failed to breach the $10 per share mark since 2012.
