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Atmel Corporation’s Acquisition by Dialog Semiconductor: Analysts Weigh In

By Howard Kim

On Sunday, Atmel Corporation (NASDAQ:ATML), a US-based designer and manufacturer of semiconductors, accepted an acquisition bid by Britain’s Dialog Semiconductor. The deal is valued at $4.6 billion, or $10.42 per Atmel share. Here’s what two analysts following the company had to say about the deal.

On September 21st, Betsy Van Hees from Wedbush downgraded Atmel’s stock to Neutral from Outperform. The analyst, however, maintained a price target of $10.

Van Hees said, “It’s a pretty broad competitive landscape that’s pretty challenging for companies like Atmel.” She added, “They need to continue to invest, which is expensive, and they need new products, which is expensive.”

Overall, Betsy Van Hees is confident that the acquisition will be beneficial for Atmel’s shareholders.

Christopher Rolland from FBR & Co., who had an Outperform rating on the stock has lowered it to Market Perform following the acquisition.

Rolland said, “As Atmel was our #1 takeout candidate for 2015, we have written extensively about the potential for accretion, pegging potential synergies at ~$200 million. While we had originally estimated a takeout price for ATML at $12 or more (partially because of this higher synergy estimate), we believe investors will be satisfied with $10.50 given the deterioration in both the semiconductor industry and the company since our analysis last June.”

Based on the offer price, Rolland has revised the price target for Atmel to $10.50, which is 23x of 2016 EPS. His earlier price target for the stock was $11.

Investors have reacted positively to this news. On Monday, the stock closed at $8.19, a 12.65% increase over the previous day’s close.

According to the nine analysts polled by TipRanks in the last three months, one is bullish on the company and eight are staying on the sidelines. The average 12-month price target on Atmel is $10.08, marking a 23% potential upside from current levels.