Exclusive: Microchip is undisclosed Atmel bidder challenging Dialog - source

By Liana B. Baker

(Reuters) - Microchip Technology Inc (MCHP.O) is the semiconductor manufacturer which made the $3.8 billion unsolicited offer for peer Atmel Corp (ATML.O) that was disclosed last week, a person familiar with the matter said on Tuesday.

Atmel said on Dec. 11 it had started negotiations with an unidentified party that made a $9 per share cash offer that could potentially be deemed more valuable than a cash-and-stock acquisition proposal by Dialog Semiconductor Plc (DLGS.DE) it accepted in September.

The source asked not to be identified because Microchip's identity has not been publicly disclosed. Microchip and Atmel did not immediately respond to requests for comment.

Atmel makes smaller processors called microcontrollers used in a wide array of electronics as well as touch screen and encryption technology. It said the unsolicited offer allows shareholders to receive $9 in cash per share or elect to receive up to $1 billion in the acquirer's stock.

Microchip shares rose 2.5 percent to $45.70 per share on the news while Atmel shares fell 0.8 percent to $8.65 per share.

Atmel entered in a merger agreement with the London-based Dialog on Sept. 20 to be acquired for $4.65 per share in cash and 0.112 of a Dialog American depositary share for each Atmel share. Atmel said the deal with Dialog will stay in effect while it speaks to the acquirer.

Atmel shareholders are set to vote on the Dialog deal in March.

It is not the first time Microchip has tried to buy Atmel. Microchip lobbed an unsolicited bid to buy Atmel in 2008 and then launched a proxy fight which it later withdrew.

(Reporting by Liana B. Baker in New York; Editing by Bill Rigby and Lisa Shumaker)