NEW YORK (TheStreet) -- Atmel Corp. (ATML) stock is up by 3.84% to $7.97 in early-morning trading on Wednesday, after the company's board determined that an unsolicited acquisition proposal from Microchip Technology (MCHP) was superior to Dialog Semiconductor's offer.
Microchip, a Chandler, AZ-based semiconductor company, offered to buy the San Jose-based micro-controller provider for $8.15 per share in cash and stock.
Last year, Dialog Semiconductor offered to buy Atmel for $4.65 per share in cash and 0.112 of a Dialog American Depository Share for each Atmel share.
Atmel notified Dialog on Tuesday that it intends to terminate its agreement and agree to Microchip's offer, the company said in a statement on Wednesday.
If Atmel terminates its agreement with Dialog, it will pay a $137.3 million termination fee, the company said. Atmel will consider any changes to Dialog's proposal until January 19.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate ATMEL CORP as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a decline in the stock price during the past year, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ATML's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ATML has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for ATMEL CORP is rather high; currently it is at 50.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.21% is in-line with the industry average.
- ATMEL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ATMEL CORP turned its bottom line around by earning $0.08 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.08).
- Net operating cash flow has decreased to $30.59 million or 30.28% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ATMEL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ATML