* Dialog says companies could not agree on terms
* Says remains committed to exploring strategic moves
* AMS confirms does not intend to make a takeover offer
* Dialog shares turn positive in early trade
(Adds AMS, analyst comments, updated share prices)
By Maria Sheahan and Georgina Prodhan
FRANKFURT/VIENNA, July 22 Talks for Austrian
chipmaker AMS to buy German peer Dialog Semiconductor
have collapsed, with the two firms blaming differences
over price and future strategy.
Dialog and AMS said last month they were in "very
preliminary" talks over a deal that could have created a
European chipmaker with a market value of about $4.7 billion,
and potentially a stronger business to tap the burgeoning market
for web-connected devices.
AMS makes electronic sensors, which can measure everything
from air pollution to the human heartbeat, while Dialog's chips
manage power consumption. Both firms supply chips to Apple
for iPhones and iPads.
"We had detailed discussions over the period after the first
announcement but in the end there wasn't a common
understanding," a spokesman for AMS said on Tuesday.
"Terms and valuation played a role but also the strategic
direction going forward," he said, declining to elaborate.
The chipmaking industry is seeing a wave of deals as firms
look for alternatives to saturated mobile phone markets.
Last month, Analog Devices Inc said it would buy
Hittite Microwave Corp in a deal valued at $2 billion
and Cirrus Logic Inc said it would buy Wolfson
Microelectronics Plc for an agreed 291 million pounds
($497 million) in cash.
DZ Bank analyst Harald Schnitzer said he believed the
sticking point was the valuation of Dialog, keeping his "buy"
recommendation on the German company's stock.
"Dialog seems to see itself more valuable compared to AMS
since its expected growth rates are quite high and Dialog has a
more flexible fabless business model, which has some advantages
compared to AMS, which owns production facilities," he added.
Dialog trades at 17.7 times estimated 12-month forward
earnings, according to Thomson Reuters data, at a premium to
AMS's multiple of 15.4.
Shares in Dialog, which have more than doubled in value over
the past year, erased early losses on Tuesday, trading 0.8
percent higher at 23 euros by 0755 GMT. Switzerland-listed AMS
was 0.7 percent higher at 143.40 Swiss francs, in line with the
European technology index.
Dialog said it would now focus on its strategy of becoming a
leading provider of analogue mixed signal semiconductors for
fast-growing markets including smartphones, tablets, solid state
lighting as well as the wearable and smart home segments.
"With the end of these discussions, it is business as usual,
namely delivering increasing value for our shareholders," Dialog
Chief Executive Jalal Bagherli said in a statement.
Nonetheless, the company said it remained committed to
exploring strategic moves to beef up its product portfolio and
expand its market.
"Given its financial strength and FCF (free cash flow)
generation capacity, we are convinced Dialog will acquire a
different sensor asset next year," Kepler Cheuvreux analyst
Bernd Laux said, also sticking with a "buy" recommendation.
AMS said it would concentrate on its own business. "It was
an interesting opportunity but it's not top of our agenda that
we have to do any more transactions," the spokesman said.
($1 = 0.5856 British Pounds)
(Editing by Louise Heavens and Mark Potter)