UK-based chipmaker Dialog Semiconductor has agreed to buy US semiconductor manufacturer Atmel in a deal worth $4.6bn (£3bn; €4.1bn). The move is part of Dialog's efforts to diversify its product portfolio and reduce its reliance on smartphone makers such as Apple and Samsung.
Atmel specialises in the manufacture of microcontrollers that offer connected solutions to customers in the industrial, automotive, consumer, communications and computing markets. In a statement, Dialog said it would pay $4.65 in cash and 0.112 of a Dialog Semiconductor American Depository Share (ADS) for each Atmel share.
Jalal Bagherli, chief executive of Dialog, said: "The rationale for the transaction we are proposing today is clear – and the potential this combination holds is exciting. By bringing together our technologies, world-class talent and broad distribution channels we will create a new, powerful force in the semiconductor space."
Atmel, which employs about 5,000 people around the world, also specialises in flash memory and touch sensor technology. The San Jose firm's president and chief executive, Steven Laub, said: "This transaction combines two successful companies and will create significant value for Atmel and Dialog shareholders, customers and employees. Adding Dialog's world-class capabilities in power management with Atmel's keen focus on microcontrollers, connectivity and security will enable Dialog to more effectively target high-growth applications."
Dialog, which is headquartered in Reading but is listed on the Frankfurt Stock Exchange, said it would fund the purchase with a combination of existing cash, $2.1bn of new debt and the issuance of 49 million ADSs to be listed in New York. It added that the merger will lead to annual cost savings of $150m within two years.
The transaction, which is expected to be completed in the first quarter of next year, will see Atmel shareholders owning approximately 38% of the combined company. Last year, Dialog failed in its bid to acquire Austrian chipmaker AMS AG.