CHANDLER, Ariz. and SAN JOSE, Calif., Jan. 19, 2016 -- Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of microcontroller, mixed-signal, analog and Flash-IP solutions, and Atmel Corporation (NASDAQ: ATML) today announced that Microchip has signed a definitive agreement to acquire Atmel for $8.15 per share in a combination of cash and Microchip common stock. The acquisition price represents a total equity value of about $3.56 billion, and a total enterprise value of about $3.40 billion, after excluding Atmel's cash and investments net of debt on its balance sheet of approximately $155.0 million at December 31, 2015.
"We are delighted to welcome Atmel employees to Microchip and look forward to closing the transaction and working together to realize the benefits of a combined team pursuing a unified strategy. As the semiconductor industry consolidates, Microchip continues to execute a highly successful consolidation strategy with a string of acquisitions that have helped to double our revenue growth rate compared to our organic revenue growth rate over the last few years. The Atmel acquisition is the latest chapter of our growth strategy and will add further operational and customer scale to Microchip," said Steve Sanghi, President and CEO of Microchip.
"Microchip and Atmel have a strong tradition of innovation, stretching across microcontroller, analog, touch, connectivity and memory solutions. Joining forces and combining our product portfolios will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve," said Ganesh Moorthy, COO of Microchip.
"Our Board of Directors determined, after consultation with our financial advisor and outside legal counsel, that the transaction with Microchip is a superior proposal for Atmel's stockholders under the terms of our merger agreement with Dialog Semiconductor plc that we terminated today. Under the Microchip transaction, Atmel stockholders will receive a much higher cash consideration per share compared to the Dialog deal, as well as the opportunity for further upside through the ownership of stock of Microchip," said Steven Laub, President and CEO of Atmel.
Concurrent with this announcement, Microchip announced that its Board of Directors has authorized an increase in the existing share repurchase program to 15.0 million shares of common stock from the approximately 11.4 million shares remaining under the prior authorization. Under this program, in the next several months, Microchip intends to repurchase the approximate number of shares it issues in the Atmel acquisition, which is expected to result in the transaction having the accretive effects of a cash transaction from a financial perspective.
Following the closing, the transaction is expected to be immediately accretive to Microchip's non-GAAP earnings per share. Based on currently available information, Microchip anticipates achieving an estimated $170 million in synergies from cost savings and incremental revenue growth in fiscal year 2019 that begins on April 1, 2018.
The transaction has been approved by the Board of Directors of each company and is expected to close in the second quarter of calendar year 2016, subject to approval by Atmel's stockholders, regulatory approvals and other customary closing conditions. No approval by Microchip's stockholders is required in connection with the transaction. The transaction is not subject to any financing conditions.
In the transaction, stockholders of Atmel will receive $7.00 per share in cash and $1.15 per share in Microchip common stock, valued at the average closing price for a share of Microchip common stock for the ten most recent trading days ending on the last trading day prior to the closing, with the maximum number of Microchip shares to be issued in the transaction being 13.0 million. To the extent that the number of Microchip shares issuable would exceed 13.0 million, the cash consideration per Atmel share will be increased such that the value of the combined cash and stock consideration will remain at $8.15 per share (as valued based upon the average closing price described in the previous sentence). Microchip expects to fund the cash portion of the purchase price through a combination of cash on its balance sheet and borrowings under its existing credit facility.
In connection with the termination of the merger agreement with Dialog, Atmel has paid Dialog a termination fee of $137.3 million.
J.P. Morgan is acting as Microchip's exclusive financial advisor. Wilson Sonsini Goodrich & Rosati, P.C. is acting as Microchip's legal advisor. Qatalyst Partners is acting as exclusive financial advisor to Atmel. Jones Day is serving as Atmel's legal advisor.
Conference Call Information; Presentation Materials
Microchip will host a conference call today, January 19, 2016 at 5:00 p.m. (Eastern Time) to discuss this release. You may view our presentation material to which we will refer during the conference call on Microchip's website at www.microchip.com. The webcast will be available for replay until January 26, 2016.
A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on January 19, 2016 and will remain available until 8:00 p.m. (Eastern Time) on January 26, 2016. Interested parties may listen to the replay by dialing 719-457-0820 and entering access code 219583.
Stockholders of Microchip and Atmel are cautioned not to place undue reliance on the forward-looking statements in this press release, which speak only as of the date such statements are made. Neither Microchip nor Atmel undertakes any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events.
About Microchip Technology
Microchip Technology Inc. (NASDAQ: MCHP) is a leading provider of microcontroller, mixed-signal, analog and Flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at http://www.microchip.com.
Atmel Corporation (NASDAQ: ATML) is a worldwide leader in the design and manufacture of microcontrollers, capacitive touch solutions, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components. Leveraging one of the industry's broadest intellectual property (IP) technology portfolios, Atmel is able to provide the electronics industry with intelligent and connected solutions focused on the industrial, automotive, consumer, communications and computing markets. For more information, visit the Atmel website at http://www.atmel.com.