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NEW YORK (TheStreet) -- Chip company Dialog Semiconductor (DLGNF) has agreed to buyAtmel (ATML) in a $4.6 billion cash-and-stock deal. Following the announcement, shares of Dialog tanked, which Jim Cramer finds surprising.

Cramer said, "Dialog was very levered to Apple (AAPL) - Get Apple Inc. Report; they wanted to be levered to the Internet of Things [IoT]. That's been Atmel's way to go. Atmel has cut its cell phone exposure down below double digits, about 9%."

"Dialog needed to expand into the industrial segment, the Internet of all things, so to speak, and that's Atmel's specialty," Cramer explained in Real Money. He goes on to say, "The two companies together would seem to be good, but Dialog [is] getting hammered even though Atmel is up a little bit."

Dialog is a U.S.-based company that sells chips used in Apple smartphones as well as other high-end phones. San Francisco, Calif.-based Atmel manufactures microcontrollers used in hardware.

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Cramer says, "Atmel had been signaling that it may be for sale with the right offer, but people decided that they want to have Dialog be a pure Apple play. I think Dialog is ensuring that even if Apple cuts them off, they'll still do well."

Dialog CEO Jalal Bagherli said in a statement, "By bringing together our technologies, world-class talent and broad distribution  channels we will create a new, powerful force in the semiconductor space. Our new, enlarged company will be a diversified, high-growth market leader in Mobile Power, IoT and Automotive."

Baherli said the combined company is expected to generate $2.7 billion in annual revenue. He also expects annual savings of $150 million within two years.

Cramer says he likes the combination of Dialog and Atmel and that he would be a buyer of Atmel.

At the time of publication, Jim Cramer's charitable trust Action Alerts PLUS held no positions in stocks mentioned.