China Electronics Corp (CEC, ’†š “dŽq), Chinafs largest state-owned information technology company, is in preliminary talks to acquire US-based Atmel Corp, sources with knowledge of the process said.

CEC is discussing a bid for Atmel, a manufacturer of chips used in industrial machinery and cars, at about US$8.50 a share and the two sides are negotiating, said the sources, who asked not to be identified as the information is private.

Atmel closed at US$8.18 in New York trading on Wednesday, down from a high of US$10.44 in June, giving the San Jose, California-based company a market value of about US$3.4 billion.

There is no guarantee a deal will get done and talks might still fall apart. The thin premium being discussed and regulatory scrutiny that would come with a Chinese buyer raise the risks that a deal would not materialize, one of the people familiar with the situation said.

A combination of CEC with Atmel would probably be subject to approval from the US Committee on Foreign Investment, one of the sources said.

There is also the possibility that other suitors could emerge and an agreement could be reached with a different company.

Atmel said last month it had been considering strategic options. Any sale would extend a record year for semiconductor deals, as chipmakers combine to counter slowing growth and increasing costs.

China has been picking up US chip-related assets at it tries to increase its domestic capabilities and replace imports of crucial electronics components.

Atmel spokeswoman Agnes Toan said the company does not comment on speculation.

A spokeswoman for CEC said she could not immediately comment.

Atmel specializes in microcontrollers, small chips that perform a range of functions such as converting the touch of a button into an action in a car or factory machine.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved