Microchip says will nominate slate for Atmel board
SAN FRANCISCO (Reuters) - Microchip Technology Inc (MCHP.O) said on Wednesday it would seek to replace Atmel Corp's (ATML.O) board with its own candidates, signaling its determination to acquire the rival chipmaker even as the turbulent markets continue to capsize deals all around.
Last month, Microchip and ON Semiconductor Corp (ONNN.O) jointly made an unsolicited offer to buy Atmel for $2.3 billion.
The companies had no choice but to turn hostile after Atmel rejected the offer, although they would rather engage in discussions, the chief executives of Microchip and ON Semi said in a statement.
"Given the response of the Atmel board, Microchip intends to take the offer directly to Atmel's shareholders by proposing an alternate slate of directors for Atmel's next shareholders meeting," Microchip CEO Steve Sanghi and ON Semi CEO Keith Jackson said.
However, only Microchip will nominate the slate to Atmel's seven-member board. It has not yet disclosed whom it plans to nominate. Atmel has not yet set a date for its 2009 annual meeting but the 2008 meeting was held on May 14.
Atmel said in a statement the $5 a share offer is "inadequate" and its shareholders would be better off supporting the company's ongoing turnaround plan.
The San Jose, California-based maker of microcontrollers is in the midst of restructuring its operations, and has said it will sell off or shut down businesses that are not central to its core focus.
Atmel shares were down 6 percent.
Atmel last month also raised the concern that ON Semi may not be able to raise cash to finance its part of the proposal given the credit environment.
ON Semi has itself reached out to private equity firms in search of cash to finance the deal, seeking alternatives to issuing debt, sources have told Reuters.
The proposed transaction would involve Microchip buying Atmel for $5 a share and then selling Atmel's nonvolatile memory, radio frequency and automotive businesses to ON Semi.
ON Semi's Jackson has said the company could pay up to $1 billion for those assets, using its own cash and additional financing.
"We do not need to rush out and borrow money tomorrow or yesterday to put that financing in place," ON Semi's chief financial officer, Don Colvin, said on a recent earnings call. "It's something that we will probably have to do or look at next year."
The Microchip and ON Semi CEOs said on Wednesday they remain "fully committed to our offer despite unprecedented weakness and volatility in the equity markets."
Several companies have abandoned hostile pursuits in recent weeks, as acquirers find it tough to raise debt to finance purchases, and target companies insist that uncertain markets make it hard to value their stock accurately. Continued...
