Date: 03/10/2008

Atmel showing no interest in acquisition proposal is right move!

Microchip Technology and ON Semiconductor announced that, they have sent a proposal to the Board of Directors of Atmel Corporation to acquire Atmel for $5.00 per share in cash. The proposal, which is being led by Microchip, provides a premium of 52.4% to Atmel's closing price of $3.28 on October 1, 2008, and values Atmel at $2.3 billion. The Microchip's eye is on Atmel's MCU pie, whereas On Semi is setting sight on Flash, RF and automotive.

Atmel has few extremely interesting products, which got better appreciation and acceptance by design engineers. Microchip and On Semi can gain significant competitive advantage with this acquisition but the question is, how much does this benefit Atmel. Atmel is in no any weak to seek for a sell off except for slightly poor stock performance. With its range of products and a good bunch of loyal customers, expanding is quite achievable. Companies like Luminary Micro may put ASP pressure but can be handled with some smart strategies.

The case is similar to Vishay's proposal to International Rectifier.

Who knows! If the rate offered to complete the deal shoots up, all the stumbling blocks will melt.