Elliott Increases Dialog Stake, Still Opposes Atmel Deal
November 11 2015 - 05:50PM
Dow Jones News
FRANKFURT—Activist hedge fund Elliott Management on Wednesday
said it has increased its stake in Dialog Semiconductor PLC and
reiterated its opposition to the U.K.-based chip maker's planned
$4.6 billion acquisition of U.S. peer Atmel Corp., intensifying the
spat with the chipmaker and threatening to derail the deal.
Elliott Associates LP and Elliott International LP now hold a
combined 3.6% in Dialog, up from 2.9%.
"Dialog's share price declined by 26%…from the day prior to the
announcement of the [Atmel] transaction," but regained 19% since
two proxy advisors and Elliott have published their opposition to
the deal, Elliott said. This underlines the skepticism of
investors, the hedge fund added.
Dialog declined to comment late Wednesday. Earlier In the day,
the company said Elliott seems focused on the short term, and
exaggerates both the deal premium and the debt levels the
transaction would bring for Dialog, all while neglecting the
potential.
Elliott reiterated Wednesday it believes the acquisition is too
pricey. People familiar with the matter said Atmel's share price
had increased considerably prior to announcement of the proposed
deal, fueled by speculation and despite analysts lowering their
earnings estimates.
Dialog, which was spun off from German luxury-car maker
Daimler-Benz AG in 1999, needs 50% of shares voted to approve the
transactions to go ahead. The threshold, albeit lower than the
usual 75% requirement, might be tough to reach as Elliott said it
is gathering support from fellow shareholders.
Dialog, which sells chips used to manage power in high-end
smartphones, including those made by Apple Inc., in September
announced it reached an agreement to buy San Jose, Calif.-based
Atmel. Atmel is best known for chips called microcontrollers that
provide computing power for many kinds of consumer and business
hardware.
Dialog said the deal will help the company reduce dependence on
a few smartphone makers. At the same time, he said, acquiring
Atmel's customer base and line of products will make Dialog a major
player in chips for connected cars, wearable devices and other
networked gadgets lumped under the catchall phrase Internet of
Things.
But the Paul Singer-led Elliott said it believes the deal
represents $500 million in value destruction for Dialog investors
because the deal premium exceeds the expected synergies.
Write to Eyk Henning at eyk.henning@wsj.com
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(END) Dow Jones Newswires
November 11, 2015 17:35 ET (22:35 GMT)
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