EX-99.2
Published on October 3, 2008
Exhibit 99.2
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PROPOSED ACQUISITION OF ATMEL CORPORATION October 2008 |
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2 Safe Harbor Cautionary Statement: Statements in these materials, including those regarding Microchip Technology Incorporateds (Microchip) and ON Semiconductor Corporations (ON Semiconductor) joint proposal to acquire Atmel Corporation (Atmel) and the expected impact of the proposed acquisitions on each of Microchips and ON Semiconductors strategic and operational plans and financial results, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We use words such as anticipate, believe, expect, intend, estimate (and the negative of any of these terms), future and similar expressions to help identify forward-looking statements. These forward-looking statements are subject to business and economic risk and reflect the current expectations of each of Microchips and/or ON Semiconductors management, as applicable, and involve subjects that are inherently uncertain and difficult to predict. Actual results could differ materially from these forward-looking statements because of factors such as: the possibility that Microchips and ON Semiconductors joint proposal to acquire Atmel will be rejected by Atmels board of directors or shareholders; the possibility that ON Semiconductor will not be able to obtain sufficient financing; the possibility that Microchip and ON Semiconductor will be unable to reach agreement on the terms of the sale of certain Atmel assets; the possibility that, even if Microchips and ON Semiconductors proposal is accepted, the transaction will not close or that the closing may be delayed; the effect of the announcement of the proposal on each of Microchips, ON Semiconductors and Atmels strategic relationships, operating results and businesses generally, including the ability to retain key employees; each of Microchips and ON Semiconductors ability to successfully integrate Atmels operations and employees; general economic conditions; and other factors described in Microchips SEC filings (including Microchips Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2008) and ON Semiconductors SEC filings (including ON Semiconductors Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended June 27, 2008). If any of these risks or uncertainties materializes, the joint proposal may not be accepted, the acquisitions may not be consummated, the potential benefits of the acquisitions may not be realized, Microchips, ON Semiconductors and/or Atmels operating results and financial performance could suffer, and actual results could differ materially from the expectations described in these forward-looking statements. All information in these materials is as of October 2, 2008. Each of Microchip and ON Semiconductor undertakes no duty to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. |
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3 Transaction Summary Microchip and ON Semiconductor have submitted a joint proposal to acquire Atmel Microchip to acquire the Microcontroller ($513M LTM revenue) and ASIC ($496M LTM revenue) businesses ON Semiconductor to acquire the NVM ($385M LTM revenue), RF and Auto ($282M LTM revenue) businesses Microchip intends to sell the ASIC business either before completing the transaction or shortly thereafter. Not a closing condition The ASIC business will be accounted for as an asset held for sale if not sold prior to close Price: $5.00 per share in cash 52.4% premium to Atmels closing price on October 1, 2008 Transaction has a total equity value of $2.3 billion on a fully diluted basis Transaction expected to be accretive to Microchips non-GAAP EPS in full first year Transaction expected to be accretive to ON Semiconductors non-GAAP EPS in full first year |
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4 Microchip Transaction Rationale Combines complementary businesses Broadens market presence Drives efficiencies through scale Atmel has strong momentum in proprietary AVR architecture Broad product line with 8- and 32-bit solutions Broad base of technology building blocks - memory, connectivity, touch sense and security Significant opportunities to drive operational synergies across COGS, SG&A and R&D Leverage sales channels to broaden reach of MCU products Optimize redundant R&D spending Exploit low-cost manufacturing capabilities Eliminate redundant G&A costs Enhances Microchips opportunities in 8-bit segment Extends Microchips 32-bit offering and segment opportunities with AVR32 and ARM based solutions Expands Microchips fast growing mTouch solutions with Atmels QTouch® solutions for touch sensing applications |
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5 Atmels MCU Business AVR 8-bit AVR 32-bit ARM-based 8051 8-bit Over 100 AVR products Proprietary architecture High performance, low power, high code density, flash program memory & highly integrated Based on standard 32-bit ARM7 and ARM 9 architectures Valuable 200+ MIPS 32-bit flash MCU technology Based on standard 8051 CPU 2KB to 128KB of embedded flash memory Source: Atmel website and 2007 annual report MCU Architectures: AVR ARM/ 8051 LTM revenues: $513mm CY04-CY07 CAGR: 11% |
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6 MCU Product Line Synergy 8-bit PIC10, PIC12 PIC16, PIC18 Significant Growth Opportunity Microchip Strength Fastest growth 16-bit Atmel Strength Growth Opportunity Best In Class Solutions Growth Opportunity 16-bit PIC24 dsPIC 32-bit PIC32 mTouch Technology 8-bit AVR 8051 16-bit 32-bit AVR32 ARM7, ARM9 QTouch® Technology |
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7 Highly complementary Increases SAM / BOM New opportunities in RFID & GPS ON Semiconductor Transaction Rationale Creates Automotive and EEPROM leader Further extends analog transformation Adds complementary products with limited incremental operating expenses Drives scale & cash flow: >$2.7B revenues & in-line operating model to LT target model Investor Highlights Consolidates Strengths in Products and End Markets Enhances ability to deliver complete solutions to its customer base Significant synergies in geography, revenue and channel Leverages ON Semiconductors customer base and supply chain Significant Product and Customer Benefits Operating expense synergies by leveraging ON Semiconductors existing automotive design and customer support infrastructure Significant cost efficiencies in migrating products to ON Semiconductors fab network and utilizing ON Semiconductors low cost assembly and test factories Expect EPS accretion and opportunity to improve margins Significant Opportunities to Enhance Earnings Strong combined portfolio Broadens standard product portfolio NVM RF & Auto |
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8 All Cash Premium Proposal vs. the Status Quo of Atmels Incomplete Turnaround Plan Atmel has struggled to execute on its transformation plan Atmels strategy continues to include its underperforming ASIC and Auto businesses, which do not have the scale to successfully compete in the marketplace The changes Atmel has implemented have only led to modest improvements in operating results. Operating margin for Atmels microcontroller business continues to significantly lag behind Microchip The current competitive and macroeconomic landscape only serve to magnify Atmels operational challenges Despite implementing some strategic changes, Atmels stock has dropped by 46% over the past 2 years. Over the same period, Microchip and ON Semiconductor have performed significantly better than Atmel |
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9 Next Steps to Transaction Completion Microchip and ON Semiconductor are committed to moving forward on an expedited basis to complete the transaction Microchip and ON Semiconductor are prepared to begin confirmatory due diligence immediately Commence regulatory process Atmel, Microchip and ON Semiconductor negotiate and sign merger agreement and ancillary purchase agreement Customary conditions to closing, including receipt of regulatory approvals Transaction closes Microchip and ON Semiconductor are fully committed to completing transaction have not ruled out any potential options |
