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Dialog-Atmel deal wins regulatory approvals

Posted: 16 Nov 2015 ?? ?Print Version ?Bookmark and Share

Keywords:acquisition? consolidation? semiconductor industry?

Chipmaker Dialog Semiconductor has received approval from U.S. and German regulators for its $4.6-billion takeover of Atmel, even as an activist hedge fund increased its stake in Dialog in hopes of blocking the transaction.

U.K.-based Dialog said it received notification that the U.S. Justice Department and Federal Trade Commission granted the deal an early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The firm said it was also notified by Germany's Federal Cartel Office that the deal has been cleared to proceed.

Meanwhile, Elliott Management, a New York-based manager of two U.S. hedge funds that opposes the Dialog-Atmel deal, increased its stake in Dialog. Elliot Management said Friday (Nov. 13) that Elliott Associates LP and Elliott International LP now hold a combined five per cent of the voting rights in Dialog, up from less than three per cent Nov. 9. Elliott reiterated that it plans to vote against the acquisition of Atmel.

Elliott released an open letter to Dialog shareholders on Nov. 9, stating its intentions to vote against the Atmel acquisition, which it called "the wrong deal at the wrong price." Elliott said Dialog's "desperation" to reduce its dependency on Apple Inc., which accounts for about 79 per cent of Dialog's sales, had "led the company to enter an auction process and overpay for a tier-3 microcontroller company that has a huge employee base."

According to the letter, Atmel has about 5,100 employees, compared with 1,500 for Dialog.

Dialog issued a response to Elliott's letter Nov. 11. In the letter, Dialog reaffirmed its board of directors' unanimous support for the acquisition of Atmel and said Elliott's motivations "appear to be based on a short-term risk arbitrage trade rather than long-term shareholder value creation."

Dialog announced Sept. 20 that Atmel's board accepted its $4.6-billion offer to acquire the firm following a bidding war. The transaction is expected to close in the first quarter of 2016, pending shareholder approval later this month.

The proposed acquisition of Atmel by Dialog comes amid an unprecedented wave of consolidation in the semiconductor industry. According to market research firm IC Insights, in the first half of 2015 alone the value of semiconductor acquisition deals totalled about $72.6 billionmore than six times the annual average for M&A deals struck during the five previous years.

- Dylan McGrath
??EE Times U.S.

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