Valley-based chipmakers Microchip Technology and ON Semiconductor said Wednesday they will continue their pursuit of Atmel Corp. by attempting to replace Atmel's board of directors with their own slate of candidates.
The announcement was the latest development in the hostile takeover effort by the two Valley companies of Atmel, a San Jose, Calif.-based semiconductor company.
After weeks of unsuccessful negotiating with the California company, the two Valley firms went public on Oct. 2 with their cash offer of $5 a share for Atmel, a 52 percent premium over Atmel's share price at the time. Under the $2.3 billion proposal, Microchip would acquire Atmel's microcontroller business while ON Semiconductor would get its memory, radio frequency and auto-chip businesses.
Atmel's board of directors rejected the offer and said shareholders would get greater value from a turnaround plan launched by the company's managers.
Atmel reiterated its objections to the deal Wednesday, citing numerous problems including difficulty in obtaining financing in the current credit environment. Also the firm questioned in a written statement if ON Semiconductor is fully committed to its part of the purchase. Atmel said it was too risky to open its books to its two competitors for due diligence purposes when the deal was uncertain.
Microchip chief executive Steve Sanghi said the two suitors will continue to approach Atmel shareholders and try to convince them of the benefits of the offer. But he said his real objective is to talk directly to the Atmel board.
"If the board were willing to engage with us, we could answer their concerns," he said.
ON Semiconductor chief financial officer Donald Colvin said in October that his company has multiple sources of financing to complete its part of the plan.
Microchip, which is based in Chandler, said it has received government regulatory clearance for the acquisition. Phoenix-based ON said it expects to receive antitrust clearance but will wait to make the necessary filings until an acquisition agreement with Atmel is executed.
An ON Semiconductor spokeswoman said ON cannot file before then because the deal is structured so the Phoenix company will be acquiring the assets it wants from Microchip, and Microchip would first be the purchaser of Atmel's common stock. Under federal rules, ON can't seek antitrust clearance without Atmel's cooperation until Microchip acquires the assets, she said.