Atmel Corp. (ATML)

[Stock Guy777]

Apparently I'm not the only one seeing a buyout opportunity!
ATML in the crosshairs for potential take over. GOOD TIMES AHEAD MY FRIEND!


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By Noel Randewich and Liana B. Baker

SAN FRANCISCO/NEW YORK, March 6 (Reuters) - Avago Technologies Ltd may be one of the pacesetters among companies looking to make a purchase in the semiconductor industry after its advanced talks last month to acquire Freescale Semiconductor Ltd fell through.

Demand for cheaper chips and new products to power Internet-connected gadgets is expected to drive chip industry consolidation beyond NXP's $12-billion purchase of Freescale announced this week, analysts said.

"The pace of M&A in semis has been elevated," said Jefferies analyst Mark Lipacis. "We expect more of the same."

Avago's main business is its wireless segment, which last quarter accounted for about 40 percent of revenue, and it sells radio frequency chips for products such as Apple Inc's iPhone.

The company, which has a market cap of $32 billion, could now look at expanding in areas ranging from analog semiconductors to radio frequency technology, and could roll up several smaller analog companies or pursue a larger acquisition, Reuters reported.

It couldn't be learned what companies Avago was pursuing.

Deals that could occur over the next few years are in the range of $600 million to $2 billion to $3 billion.

Analysts see companies that make chips for connected devices as top contenders for deal activity.

Relatively small chipmakers with annual sales below $1 billion in markets from the auto industry to consumer gadgets are in the crosshairs of larger players awash in growing amounts of cash and rising stock prices not seen in more than a decade.

With steady demand from automakers, makers of consumer electronics and data center operators, chip companies have cut costs in recent years and returned growing amounts of cash to shareholders who, in turn, have rewarded those companies' stocks.

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Chipmakers that roughly fit the target model for potential deals, in terms of size and products, include smaller companies such as Micrel, Intersil, Atmel, M/A-COM and Silicon Laboratories, analysts said.
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These companies make a variety of chips that manage power, allow wireless communication and control devices, among other things.

Features such as Wi-Fi or Bluetooth that once required chips sold by separate companies can now be squeezed onto single pieces of silicon made by industry leaders' technology.

The firms could pursue mergers with smaller peers or could also become targets for larger chipmakers such as Intel, Qualcomm, Texas Instruments and Skyworks Solutions , according to analysts.

Micrel in January said its board had hired a bank to review strategic alternatives and to maximize shareholder value.

DEALS BOOST STOCKS

Nearly all the deals announced so far have driven up shares of the acquirers, which gives other companies confidence to pursue M&A since investors reward them for it.

"So far the reaction to these deals has been very positive," said RBC analyst Doug Freedman.

Shares of NXP surged 17 percent this week after it said it would buy Freescale to create a combined company valued at moe than $40 billion while cutting costs and growing market share.

Worldwide semiconductor M&A reached $31 billion last year, the most since 2011, Thomson Reuters data show. In the 12 months through March 2, 472 chip M&A deals were made worldwide, up from 383 in the previous year.

Tim Wilson, a venture capitalist at Artiman Ventures who specializes in chips, expects large chipmakers to buy startups with specialized technologies, many focusing on emerging areas such as wireless home appliances and other connected devices that fly under the banner of the "Internet of Things."

For example, top mobile chipmaker Qualcomm in October agreed to buy Britain's CSR for $2.5 billion to bolster its offering in Bluetooth, another short-range communication technology.

"If you look at what's being acquired, everyone is filling in product gaps," Wilson said. (Reporting by Noel Randewich in San Francisco and Liana B. Baker in New York. Editing by Greg Roumeliotis, John Pickering and Clarence Fernandez)