U.K.-based power management chipmaker Dialog Semiconductor (DS) has agreed to acquire Atmel for $4.6 billion in an all-cash and stock transaction.
The deal will help expand Dialog’s portfolio in the mobile power, Internet of Things (IoT) and automotive markets. DS says the combined company will be better suited to address these market opportunities that are expected to be valued at $20 billion by 2019. Atmel’s products will compliment DS’s line of proprietary and ARM-based microcontrollers and DS will utilize Atmel’s sales channels to diversify its customer base.
Jalal Bagherli, CEO of DS, says in a statement that the potential for this combination is exciting and will help to “create a new, powerful force in the semiconductor space.” Bagherli says that combining power management, microcontrollers, connectivity and security technologies “we will create a strong platform for innovation and growth in the large and attractive market segments we serve.”
The transaction is expected to close in the first quarter of 2016. DS plans to fund the deal with existing cash and $2.1 billion of new debt. The company says in its first year following the closing, expected to be in 2017, the transaction is expected to be accretive to its underlying earnings. The company hopes to see an annual cost savings of $150 million within two years.
The Atmel acquisition continues a string of mega-deals that have occurred in the semiconductor space in the last 12 months including Nokia buying Alcatel-Lucent for $17.3 billion, Intel’s acquisition of Altera for $16.7 billion, Avago’s $37 billion deal for Broadcom, NXP’s $11.8 billion buying of Freescale and the Cypress-Spansion deal for $4 billion.
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