Sourcing Tips

China Electronics in Talks to Acquire Chipmaker Atmel

China Electronics Corp., the nation’s largest state-owned information technology company, is in preliminary talks to acquire U.S.-based Atmel Corp., people with knowledge of the process said.

CEC is discussing a bid for Atmel, a maker of chips used in industrial machinery and cars, at about $8.50 a share and the two sides are negotiating, said the people, who asked not to be identified as the information is private. Atmel closed at $8.18 in New York trading Wednesday, down from a high of $10.44 in June, giving the San Jose, California-based company a market value of about $3.4 billion.

There’s no guarantee a deal will get done, and talks may still fall apart. The thin premium being discussed and regulatory scrutiny that would come with a Chinese buyer raise the risks that a deal won’t materialize, according to one of the people familiar with the situation. A combination of CEC with Atmel would probably be subject to approval from the Committee on Foreign Investment in the U.S., the person said. There is also the possibility that other suitors could emerge and an agreement could be reached with a different company.

The thin premium implied by the offer price compared with Wednesday’s close is at odds with industry deals done earlier this year. Intel Corp., the world’s biggest chipmaker, said in June it will pay $54 a share for Altera Corp., 11 percent more than the company’s share price at the time and a 56 percent bump over where it had traded before speculation of an acquisition.

Atmel shares fell 9.2 percent in New York trading Thursday, the most in more than 11 months, to close at $7.43.

Microcontrollers

Atmel said last month it has been considering strategic options. Any sale would extend a record year for semiconductor deals, as chipmakers combine to counter slowing growth and increasing costs. China has been picking up U.S. chip-related assets at it tries to build out its domestic capabilities and replace imports of crucial electronics components.

Agnes Toan, a spokeswoman for Atmel, said the company doesn’t comment on rumors or speculation. A spokeswoman for Beijing-based CEC said she couldn’t immediately comment.

CEC has more than 70,000 employees in operations including chip design, computer manufacturing and telecommunications equipment production, according to its website.

The group, whose website features a faded photo of Mao Zedong inspecting one of its radio factories in 1956, has at least a dozen listed units including China Greatwall Computer Shenzhen Co. and Nanjing Panda Electronics Co.

Atmel specializes in microcontrollers, small chips that perform a range of functions such as converting the touch of a button into an action in a car or factory machine. The company is trying to extend the use of its products into the Internet of Things — the spread of connectivity and electronic functionality into everyday items.

Shares of Atmel have fallen 2.6 percent in New York trading this year through Wednesday, still managing to outperform the Philadelphia Stock Exchange Semiconductor Index, which has lost 8.8 percent.

Comments are closed.

Powered by: Wordpress