Please ensure Javascript is enabled for purposes of website accessibility

Atmel Corp. Soars on Acquisition by Dialog Semiconductor

By Timothy Green - Sep 21, 2015 at 12:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An acquisition was widely expected after the CEO delayed his retirement, and shareholders appear to be getting a good deal.

What: Shares of semiconductor company Atmel (NASDAQ: ATML) soared on Monday after rival Dialog Semiconductor (DLGN.F) agreed to buy the company for $4.6 billion. At 12:30 p.m., Atmel stock was up about 13% while Dialog stock was down 16%.

So what: The acquisition of Atmel continues a trend of mergers and acquisitions in the semiconductor industry, with this year being the biggest year for semiconductor deals since 2000, according to Thomson Reuters. Last month, Atmel CEO Steven Laub announced that he would be delaying his retirement as the company worked to complete a strategic review, and the stock surged at the time due to speculation that an acquisition was imminent.

Shares sank last week on a report that China Electronics was in talks to buy the company for $8.50 per share, well below the stock's 52-week high. The Dialog deal, which will see Atmel shareholders receive $4.65 in cash and 0.112 of a Dialog American depository share per Atmel share, values the stock at $10.42, just shy of the 52-week high. Dialog will fund the acquisition with cash on hand, $2.1 billion of debt, and roughly 49 million American depository shares. When the deal is complete, Atmel shareholders will own 38% of the resulting company.

Now what: Dialog expects the acquisition to close during the first quarter of 2016, with $150 million of annual cost savings realized within the first two years. The acquisition of Atmel allows Dialog to diversify into the automotive and industrial industries, decreasing its dependence on its major smartphone clients.

For Atmel shareholders, this deal looks a lot better than the rumored China Electronics deal. Atmel stock peaked in June, and prior to that it hadn't broken the $10-per-share mark since early 2012. Considering that Atmel's revenue and profits have declined over the past few years, the company may have a better chance at growth as part of Dialog.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dialog Semiconductor Stock Quote
Dialog Semiconductor
DLGN.F

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.