Why has Microchip decided not to proceed with the original offer price for Atmel?

Microchip has withdrawn its $5 per share offer for Atmel because of a substantial deterioration in Atmel's business, which is evident from negative industry pre-announcements and Microchip's own market insights. The withdrawal of ON Semiconductor from the transaction also contributed to this decision.

What are Microchip's next steps regarding the potential acquisition of Atmel?

Microchip is continuing to evaluate its strategic alternatives for a potential transaction with Atmel. This includes exploring financing sources and considering strategies for disposing of Atmel businesses that Microchip does not intend to operate long-term. However, there is no guarantee that a new offer will be made or what its terms might be.

What are the risks associated with a potential future Microchip offer for Atmel?

Key risks include the possibility that Microchip may not continue to pursue the transaction, that Atmel might reject a future offer, Microchip's ability to secure financing, challenges in agreeing on terms for asset sales, and the potential impact on both companies' operations and relationships from the ongoing uncertainty. General economic conditions are also a significant factor.

What is Microchip's current ownership stake in Atmel and its potential involvement in Atmel's shareholder meeting?

Microchip currently beneficially owns approximately 4.4% of Atmel's outstanding common stock. The company stated that it may file a proxy statement to solicit proxies from Atmel's shareholders for the 2009 Annual Meeting, indicating potential involvement in corporate governance matters.

MCHP/MCHPP 8-K SEC Disclosure

Summary

Microchip Technology Inc. (MCHP) announced on December 4, 2008, that it can no longer justify its previously proposed acquisition price of $5 per share for Atmel. This decision stems from a significant deterioration in Atmel's business, evidenced by negative pre-announcements from other semiconductor suppliers and Microchip's own market intelligence. Furthermore, ON Semiconductor's withdrawal from the proposed transaction has removed a key element of the deal. While Microchip continues to evaluate its options regarding Atmel, including potential financing and divestiture strategies for unwanted Atmel assets, there is no certainty of a new offer or its terms. The company highlights significant risks and uncertainties surrounding any potential future transaction, including financing, regulatory approvals, integration challenges, and general economic conditions. Investors should note that Microchip has a 4.4% stake in Atmel and may engage in proxy solicitations for Atmel's upcoming shareholder meeting.

Key Highlights

1Microchip has withdrawn its previous offer price of $5 per share for Atmel due to deteriorating business conditions in the semiconductor industry.
2Negative pre-announcements from other semiconductor companies and Microchip's market intelligence indicate a substantial decline in Atmel's business.
3ON Semiconductor has withdrawn from the proposed transaction, impacting Microchip's ability to proceed with the acquisition as initially structured.
4Microchip is still evaluating alternatives for a potential Atmel transaction, including financing and divestiture of certain assets.
5There is no assurance that Microchip will make a new offer for Atmel or that any future offer's terms will be favorable.
6Microchip holds a 4.4% stake in Atmel and may pursue proxy solicitations for Atmel's 2009 Annual Meeting of Shareholders.

MICROCHIP TECHNOLOGY INC 8-K Report, Corporate Update (Dec 4, 2008)

Summary

Key Highlights

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