SiliconBeat

Atmel (Nasdaq:ATML) said late Wednesday that its board of directors decided to turn down an unsolicited proposal from Microchip Technology (Nasdaq: MCHP) and ON Semiconductor  (Nasdaq: ONNN) to buy it for $5 a share, saying the offer is “inadequate in multiple respects, including value, conditionality and complexity, and is not in the best interests of Atmel’s stockholders.”

Atmel Chief Executive Steve Laub wrote in a letter addressed to Steven Sanghi, Microchip’s chairman and chief executive, and Keith Jackson, ON Semiconductor’s CEO, that Atmel’s board had, “concluded that your proposal is inadequate in multiple respects, saying it “significantly undervalues” Atmel, is “unacceptably conditional” and subject to “significant execution risk”.

Laub then took his counterparts to task, writing:

We believe it is important to set the record straight with respect to our discussions with you prior to October 1, 2008.  Despite your claims, Microchip never made a proposal to Atmel prior to its October 1unsolicited proposal.  You also falsely stated during your joint investor call that we told you that ‘the Board of Atmel did not want to do this deal under any circumstances, under any terms, at this time.’  What we  both know really occurred is that Microchip sought confidential and sensitive due diligence information for a possible multi-party transaction without specifying a price or any other terms.  Your publicly announced October 1 proposal was the first time Microchip disclosed to us a proposed price, structure, ON Semiconductor’s involvement, and the many significant associated conditions, including the financing required by ON.”

Laub also pointed to certain steps the company has taken to raise shareholder value. “Non-core manufacturing facilities have been shut down and sold, reducing Atmel’s fabs from five to two by the end of 2008.  We have divested or shut down 14 non-core product lines, while consolidating or streamlining others.  We have also implemented an 18% reduction in the Company’s workforce and expect to realize more than $125 million of cost savings in 2008, well in excess of our target of $80 million to $95 million.”