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Microchip Technology Completes Atmel Acquisition with $3.6 Billion Deal

Microchip announced yesterday that it had successfully completed its acquisition of Atmel Corporation:


Chandler, Arizona – April 4, 2016 – Microchip Technology Incorporated (NASDAQ: MCHP), a leading
provider of microcontroller, mixed-signal, analog and flash-IP solutions, today announced that it
has completed its acquisition of Atmel Corporation.

Microchip also announced that it expects it net sales for fiscal fourth quarter ended March 31, 2016 to be
an all-time record and between the mid-point and high end of the guidance of $552.0 million to $568.5
million it provided during its earning conference call on February 3, 2016. Microchip also expects its
non-GAAP earnings per share to be near the high end of its February 3, 2016 guidance of 65 cents
to 69 cents per diluted share. Microchip will announce its financial results on May 4, 2016 and will hold a
conference call at that time and will provide guidance for the June 30, 2016 quarter for the combined
sales and earnings of Microchip and Atmel.

Details of $3.6 Billion Deal:

Microchip Technology to Buy Atmel for Nearly $3.6 Billion

Microchip Technology agreed to acquire a fellow chipmaker, the Atmel Corporation, for about $3.6 billion, part of a wave of mergers and acquisitions within the semiconductor industry.

Chip makers have been combining to cut costs and build scale for their customers. Microchip agreed to acquire the 37-year-old chipmaker Micrel in May for about $839 million. Microchip purchased Supertex for $394 million in 2014, and the year before that, bought the closely held Brussels-based EqcoLogic for an undisclosed amount.

Microchip joins larger peers in this round of consolidation, including Avago Technologies, which agreed to acquire Broadcom for $37 billion, one of the biggest deals ever within the semiconductor industry.

“As the semiconductor industry consolidates, Microchip continues to execute a highly successful consolidation strategy with a string of acquisitions that have helped double our revenue growth compared to our organic revenue rate over the last few years,” said Steve Sanghi, president and chief executive of Microchip.

In agreeing to the acquisition by Microchip, Atmel ended its agreement with Dialog Semiconductor, paying a termination fee of $137.3 million. Atmel investors will get a higher proportion in cash per share in the Microchip deal compared with the Dialog deal, Steven Laub, president and chief executive of Atmel, said in a statement. Mr. Laub also said that there would be “opportunity for further upside” through Microchip’s stock.

Stockholders of Atmel will receive $7 per share in cash and $1.15 per share of Microchip stock in the deal announced on Tuesday. The Dialog agreement announced in September encompassed $4.65 in cash and 0.112 of Dialog’s American depositary shares for each share of Atmel.

Microchip also announced that its board authorized an increase in the company’s share buyback program to 15 million from 11.4 million. Microchip plans to buy back the shares it issues in the transaction with Atmel. If the number of shares required exceeds 13 million, Microchip will adjust the proportion of cash so that the total value remains $8.15 per share.

The deal is estimated to create $170 million in cost savings and revenue growth in the year that begins April 1, 2018, according to the statement.



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