Silicon Valley-based semiconductor producer Atmel Corp. has rebuffed an unsolicited offer from two Valley-based rivals to buy its businesses, saying the amount was not enough.
On Oct. 1, Chandler-based Microchip Technology and Phoenix-based ON Semiconductor proposed to buy Atmel, based in San Jose, Calif., for $5 a share, or $2.3 billion.
On Wednesday, Atmel Chief Executive Steve Laub said Atmel’s board of directors had unanimously rejected the offer because it undervalued the company and had too many conditions and uncertainties.
“While we appreciate your recognition of Atmel’s superior product and technology portfolio, we believe your proposal is opportunistic and not
consistent with the Atmel board of directors’ objective of maximizing stockholder value,” Laub said in a letter to Microchip Chief Executive Steve Sanghi and ON Chief Executive Keith Jackson.
Laub said Atmel shareholders would benefit more through a transformation plan the California company has launched, which includes closing underperforming manufacturing plants and divesting non-core businesses.
Microchip and ON officials had no immediate reaction Wednesday but said they will make a formal response “very soon.”
Also on Wednesday Atmel announced it lost $4.7 million, or a penny a share, in the third quarter ended Sept. 30, compared with a year-ago profit of $16.6 million. But the company said the loss was due mainly to one-time restructuring charges amounting to $26.6 million, and Laub insisted the results show the company’s turnaround plan is working.
“Our outstanding third quarter results . . . demonstrate the clear progress we are making,” Laub said in a written statement. “We will continue to take all appropriate steps, including selling or shutting down those businesses that do not meet our financial or strategic objectives, to ensure that we . . . realize Atmel’s full potential.”
Atmel’s stock closed Wednesday at $3.53 on the NASDAQ stock exchange, down 44 cents, or 11 percent. The stock continued to drift lower in after hours trading.
Under the plan proposed by the Valley companies, Microchip would buy Atmel for cash. Microchip would then sell some of Atmel’s businesses to ON that complement ON’s product lines. Microchip also would sell Atmel’s application-specific integrated circuits business to a third unnamed company and keep Atmel’s microcontroller business, which would complement Microchip’s line of microcontrollers.
Laub questioned the viability of that scenario, saying it would require ON Semiconductor to obtain hundreds of millions of dollars in financing at a time when credit markets are “essentially closed.”
He also said the separation of the businesses would be difficult to achieve.