The U.K-based Dialog has grabbed Atmel Corporation (NASDAQ:ATML) asset for roughly $4.6 billion, a success which would provide it with Atmel’s resonant customers like Samsung, Arrow Electronics Inc. etc. and particularly bolster its market presence in trending Internet of Things domain.
The German-listed Dialog is offering 43 percent premium to San Jose, California-based Atmel shares closing price on Friday. The deal is expected to close in the first quarter of 2016.
According to Dialog, it would finance the deal with $2.1 billion of debt and nearly 49 million of its American depository shares.
Each shareholder of Atmel would receive $4.65 in cash and 0.112 of a Dialog Semiconductor American depository share for each Atmel common share. Atmel stockholders will hold nearly 38 percent stake in combined firm after the transaction, Dialog said.
Atmel started in 1984, generates more than half of its revenue from retailing of microcontrollers. These chips are used in wide range of applications including smartwatches, fitness devices and circuit boards for electronics tinkerers known by the name Arduino. The firm also specializes in chips used to help manage sensors and touch screens in smartphones and tablets. The most important area where every tech firm is interested in nowadays is Internet of Things, a domain where Atmel also specializes.
Dialog provides highly integrated standard and custom mixed-signal integrated circuits (ICs), optimised for smartphone, tablet, IoT, LED Solid State Lighting (SSL) and Smart Home applications. Dialog has an upper hand over Atmel, as it has Apple in its fold.
The acquisition of Atmel will increase the firm’s market share in sensor industry from 5 to 10 percent, according to Jalal Bagherli, Dialog’s chief executive.
“By bringing together our technologies, world-class talent and broad distribution channels, we will create a new, powerful force in the semiconductor space,” Mr. Bagherli said.
The acquisition will reap $150 million in annual cost savings within two years after the closure of the deal and will increase firm’s earnings in 2017.
Since last year the M&A activity in semiconductor sector is on hype. Since the beginning of this year many chip companies have announced their acquisitions. Avago Technologies Ltd (NASDAQ:AVGO) in May agreed to buy Broadcom Corporation (NASDAQ:BRCM) for $37 billion, making the history’s biggest deal in the chip industry. The chip industry peer Intel Corporation (NASDAQ:INTC) also settled a deal with Altera Corporation (NASDAQ:ALTR) worth $16.7 billion.
The booming consolidation in chip industry is a sign that the industry is fading. Every firm is trying to lay its hands on other of similar kind in an attempt to cope with slowing growth and increase costs. The acquisitions will provide an edge to companies in cutting costs and increasing their exposure in market.
