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PHILADELPHIA Nov 18 (Reuters) - Chipmaker ON Semiconductor Corp ONNN.O dropped its hostile offer to acquire Atmel Corp (ATML.O) on Tuesday, leaving bidding partner Microchip Technology Inc (MCHP.O) to look for other ways to pursue a deal with Atmel.
ON Semiconductor cited weakness in the semiconductor market and the global financial crisis as reasons for walking away from the joint $2.3 billion bid for Atmel.
Microchip said it was disappointed that ON Semiconductor quit the joint bid. As a result of ON Semiconductor's withdrawal, Microchip also had to drop its bid.
Microchip, however, said it "intends to evaluate its potential alternatives for pursuing a transaction without ON Semiconductor."
ON Semiconductor and Microchip Tech had made the joint unsolicited bid to acquire Atmel in October, seeking to battle slowing growth in the semiconductor market by combining compatible products.
Atmel rejected the bid as too low, prompting ON Semiconductor and Microchip Tech to launch a hostile bid for the company.
Last week, Microchip Tech said it and ON Semiconductor remained fully committed to their acquisition proposal and planned to nominate a slate of directors at Atmel's annual shareholder meeting.
"The decision by Microchip and ON to withdraw their unsolicited unfinanced proposal underscores our board's determination that the proposal was highly conditional and subject to significant execution risk," Atmel said in a statement.
Atmel said it remained focused on its "transformation plan to ensure that Atmel's stockholders fully realize the value inherent in the company."
Shares of Atmel fell 62 cents, or 15.5 percent, to $3.37 in morning trading. Shares of Microchip shed 95 cents, or 4.9 percent, to $18.53, while ON Semiconductor gained 15 cents, or 4.6 percent, to $3.42. All of the stocks trade on Nasdaq. (Reporting by Jessica Hall; Editing by John Wallace and Brian Moss)