Dialog Semiconductor said it will be acquiring Atmel for USD 4.6 billion in cash and stock. The deal will create a company with combined revenues of USD 2.7 billion. The companies expect cost synergies will reach USD 150 million per annum within the next two years and that the acquisition will add to underlying earnings per share in 2017, the first full year following closing.
The transaction is not subject to a financing condition. Dialog has received a financing commitment from Morgan Stanley in connection with the acquisition. The commitment includes a USD 2.1 billion senior secured credit facility .
The combination has received unanimous approval by the boards of directors of both companies and is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of Dialog and Atmel shareholders. Jalal Bagherli will continue to be the CEO and executive board director of Dialog. Two members of Atmel’s existing board will join Dialog’s Board following closing.
The transaction, which is expected to close in the first quarter of next year, will create a global leader in both power management and embedded processing systems, adding a portfolio of proprietary and ARM based microcontrollers to Atmel’s ICs for connectivity, touch and security.
Under the terms of agreement, Atmel shareholders will receive USD 4.65 in cash and 0.112 of a Dialog American Depository Share (ADS) for each Atmel common share held at close, resulting in the economic equivalent of USD 10.42 per Atmel share based on Dialog’s closing stock price as of 18 September.
Dialog intends to fund the transaction with a combination of existing cash, USD 2.1 billion of new debt and the issuance to Atmel shareholders of 49 million ADSs expected to be listed on the New York Stock Exchange or the NASDAQ Stock Market. Post transaction, Atmel shareholders will own around 3 percent of the combined company. Dialog expects to pay down the transaction debt about three years after closing.
