Microchip No Longer Mulling Atmel Deal, Withdraws Board Slate

   DOW JONES NEWSWIRES 
 

Microchip Technology Inc. (MCHP) is no longer considering a transaction with Atmel Corp. (ATML) and is withdrawing its slate of nominees for the chip maker's board.

Microchip's move comes about three months after acquisition partner ON Semiconductor Corp. (ONNN) withdrew from their joint proposal to acquire Atmel, citing unforeseen deterioration in the semiconductor market.

On Tuesday, Microchip Chief Executive Steve Sanghi said the company was no longer able to put a value on Atmel and noted that based on Atmel's first-quarter guidance, the company's revenue will have declined more than 30% since the companies first made the $5-a-share takeover offer on Oct. 1, 2008.

In response to the withdrawn bid, Atmel said it looks forward to focusing exclusively on its transformation plan. Earlier this month, the company reported its third consecutive quarterly loss. The company has also announced plans to cut its North American work force by 11% and close nonmanufacturing facilities to cut costs.

In December, Microchip submitted a slate of seven board nominees to Atmel as it mulled whether to continue pursuing the rival chip maker.

Atmel, which makes chips used in several industries, including automobiles, satellite radios and touch-screen displays, rejected the companies' original offer, claiming the deal undervalued the company.

Depressed share prices made several chip companies attractive as acquisition targets last fall, but shareholders scoffed at offers seen as undervaluing the long-term prospects for the companies despite hefty premiums. Since then, however, a host of semiconductor-related companies slashed their fourth-quarter estimates and reported disappointing results as consumers cut back on computer and other technology-relates purchases.

Atmel shares fell 1.4% to $3.64 in after-hours trading and are off 21% since November.

-By Lauren Pollock, Dow Jones Newswires; 201-938-5964; [e-mail]