Another Buyout Drama

Not every match is made in heaven. But doomed deals with emotions running high still provide great drama.

When Atmel's (Nasdaq: ATML) board of directors turned down a hostile buyout bid from rivals ON Semiconductor (Nasdaq: ONNN) and Microchip Technology (Nasdaq: MCHP) last month, I thought the deal was doomed from the start. Most members of management weren't on board, the sky was (and still is) falling all around the hexed love triangle -- no way, Jose.

But the beat goes on.

On Wednesday, the would-be buyers renewed their commitment to this deal. Microchip proposed an alternative slate of directors for Atmel's next annual shareholders' meeting. ON Semiconductor CEO Keith Jackson and Microchip chief Steve Sanghi said that "if Atmel were to enter into discussions and permit us to conduct customary due diligence, we would be able to address concerns Atmel has expressed with the perceived conditionality and complexity of our offer."

Atmel feels differently, of course. Management sees little reason to share confidential details with two of its closest competitors, because the proposal is "highly conditional" and it's difficult to determine if the final papers will ever get signed. Fair enough. Welcome to this week's episode of One Life To Live, with high drama all around. Stay tuned for the shocking conclusion -- Atmel usually holds its annual meeting in late spring.

All told, I still don't think that this merger stands any greater chance of reaching consummation than Microsoft's (Nasdaq: MSFT) on-and-off courtship of Yahoo! (Nasdaq: YHOO).

The reason for my skepticism is simple: Atmel's management doesn't support the deal that's on the table. In my experience, it's usually difficult for companies to complete a deal without management support.

High drama, indeed. I'll stay away from all of these stocks until this situation is resolved, one way or another.

Further Foolishness:

• Buyout or Sellout?
• The Next Stocks You Should Buy
• Foolish Book Review: "Resisting Hostile Takeovers"