Dialog Semiconductor to buy US peer Atmel for $4.6 bn

Anglo-German chip maker Dialog Semiconductor yesterday struck a deal to buy US peer Atmel for $4.6 billion in order to expand its portfolio in the automobile, wearable devices and other networked gadgets chip market.

Under the deal that has been approved by the boards of both companies, Atmel shareholders will receive $4.65 in cash and 0.112 of a Dialog American depositary share for each Atmel common share, or the equivalent of $10.42, based on Dialog's 18 September closing price of $7.27 a share, representing a 43-per cent premium.

Dialog anticipates achieving projected annual cost savings of $150 million within two years and expects the transaction to close in the first quarter of 2016.

Founded in 1984, Nasdaq-listed Atmel manufactures chips used in applications like sensors, touch screens in smartphones and tablets, smartwatches, fitness devices and circuit boards, sensors,  symmetric and asymmetric security chips, for customers in, communications, computer networking, industrial, medical, automotive, aerospace and military.

The California-based company derives 70 per cent of its $1.4-billion annual revenue from micro-controllers.

Dialog, which is based in London but has its shares listed in Germany, said that the acquisition would enable it to emerge as a global leader in both power management and embedded processing with $2.7 billion of combined revenues.

The deal will also allow it to target the fast-growing market of around $20 billion by 2019.

''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, said Jalal Bagherli, CEO of Dialog.

Dialog, which makes chips for Apple and Samsung, provides highly integrated standard and custom mixed signal integrated circuits, optimised for smartphone, tablet, IoT, LED Solid State Lighting and Smart Home applications.

Its technology portfolio also includes audio, Bluetooth Smart, Rapid Charge AC/DC power conversion and multi touch.

In 2014, it had $1.16 billion in revenue and was one of the fastest growing European public semiconductor companies.