Microchip's Sanghi: Why we want Atmel

        http://www.eetimes.com/showArticle.jhtml?articleID=210605543&cid=NL_eet



Bolaji Ojo
EE Times
(10/03/2008 9:35 AM EDT)


Steve Sanghi, Microchip Technology Inc.'s chairman, president and CEO, said 
in an interview with EETimes that his company is bidding to acquire Atmel 
Corp. for $2.3 billion in a tie-up with ON Semiconductor Corp. to increase 
market share, cut costs and improve profitability in the microcontroller 
business.
Although the bid has turned hostile following Atmel's rejection of 
Microchip's initial offer, Sanghi insisted he would still like to renew 
negotiations with Atmel's management. Microchip would consider other options 
if this effort failed, however, he said. Here are excerpts from the 
interview:
There is a very simple reason why we are abiding for Atmel; its businesses 
are underperforming and this has driven down the stock price by more than 46 
percent in the last year.
The microcontroller business has good prospects but right now it is very 
hard to extract value from it because it is surrounded by other businesses 
that are not performing well. We have devised a creative scheme with our 
partner ON Semiconductor that would allow us to draw the diamond out of the 
rough at Atmel.
We do not want to own Atmel's entire operation. That is why we needed a 
partner who would consider the other businesses strategic and it makes sense 
for ON Semiconductor.
We will be selling the ASIC business because it doesn't make money and we 
are not interested in that operation. It's possible to turn around the ASIC 
business but it's an area where you need scale. There are other companies 
that are very good in ASICs. That's not us.
Our bid for Atmel is driven by the need to create scale for Microchip in the 
microcontroller business. Atmel's MCU business will increase Microchip's 
annual sales by over 50 percent and we're excited about it. The transaction 
will unlock value for Atmel shareholders and allows Microchip to unlock 
value in Atmel's MCU business for our own shareholders. 

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