Chandler-based Microchip Tech & Phoenix's ON Semi Make Offer on Chip Firm - PhoenixCEOCFO.com

Chandler-based Microchip Tech & Phoenix's ON Semi Make Offer on Chip Firm

Microchip Technology and ON Semiconductor Conductor Corp. made an unsolicited $2.3 billion bid for rival chipmaker, Atmel Corp. of San Jose. The deal calls for Chandler-based Microchip Technology Inc. to acquire Atmel for $5 per share and then sell pieces of the company to ON Semiconductor Corp. of Phoenix and to another company. Analyst Craig Berger of FBR Capital Markets expects the offer to be rejected and end up in a proxy battle with Atmel's board insisting on a price closer to $6 a share.

Atmel, which makes chips for cars and video game controllers, reported $48 million in profit last year on $1.6 billion in sales. However, the company has had its challenges. The company was forced to restate its earnings for several years because of an options-backdating scandal. It had fired its CEO, co-founder George Perlegos, after accusing him of misusing corporate travel funds. Perlegos then went on to fight a bitter but unsuccessful campaign to take over the company.

This acquisition by Micro and ON would be the latest in a string of mid-tier semiconductor company mergers designed to broaden product mixes and market share while achieving economies of scale in a difficult economic environment.

Atmel, which is in the midst of a restructuring, said that it would review the offer in "due course." Microchip and ON said they would consider a proxy fight if the bid was rejected

John Laub is the Chairman of the Phoenix CEO-CFO Group.

1. "San Jose's Atmel is Target of $2.3 Billion Buyout by Microchip, ON Semi." Brandon Bailey. Mercury News. October 2, 2008.

2. "Valley Chip Makers Bid $2.3 Billion for Rival." Max Jarman. The Arizona Republic
October 3, 2008.