UK’s Dialog to buy Atmel for $4.6 billion

Shares of Silicon Valley’s Atmel jumped Monday on news the chip company is being acquired by a London-based power management company for $4.6 billion.

At midday, Atmel was trading at $8.20 a share, up nearly 13 percent on the announcement.

The deal was jointly announced Monday by acquirer Dialog Semiconductor and Atmel, and is clearly aimed at building a strong contender for sales in the emerging Internet of Things, in which micro controllers, sensors and chips are expected to be embedded in billions of devices.

Dialog said the acquisition will create a company with $2.7 billion in revenue in the growing markets of mobile power, Internet of Things and connected cars. Cost “synergies” of $150 million a year are hoped for within two years.

The deal is for $2 billion in equity and $2 billion in cash.

Steve Laub, president and CEO of Atmel, said in a letter to customers that the combination of Dialog, a fabless semiconductor maker mainly in power management, with Atmel, which makes micro controllers, will “create a semiconductor franchise with the requisite scale, technology, products and worldwide team with a greater ability to scale with our customers, innovate and drive growth.”

The combined company will have “a strong presence” in mobile, industrial and automotive markets and give it a “leading position” in the Internet of Things, he said.

The deal is expected to close in the first quarter of 2016.

Photo: A circuit board (ThinkStock)

 

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