|UPDATE: FMR Boosts Stake In Atmel; Ex-CEO Said Mulling Bid |
SAN FRANCISCO (Dow Jones) - FMR Corp., which owns the Fidelity Investments
family of mutual funds, said Tuesday it boosted its share of chip maker Atmel
Corp. to a near-12% stake, adding the world's third-largest mutual fund company
to a list of buyers interesting in acquiring more of the company's shares.
FMR now owns 56.8 million Atmel shares, making Fidelity's parent company the
largest Atmel shareholder, according to a filing with the Securities and
The disclosure comes as Atmel's ousted chief executive, George Perlegos, is
said to be mulling a bid for Atmel to retake control of the company he founded
over 20 years ago, according to two people familiar with Perlegos plans.
Perlegos, who in May balked at a preliminary takeover offer from RDG Capital
LLC worth $2.7 billion, or $5.50 a share, has been meeting with private equity
firms to drum up interest for his bid, said these people, who spoke on condition
The heightened takeover interest in Atmel, which makes chips used in cell
phones, disk drives and car alarms, has helped push the company's shares (ATML)
up 92% this year. The stock has risen 26% since Aug. 4, the trading day before
Perlegos was ousted.
Atmel, which has been trying to transform itself from a memory chip firm to a
microcontroller provider, is the latest in a series of semiconductor firms to be
targeted by private equity buyers.
Freescale Semiconductor Inc. (FSL) agreed Sept. 15 to sell itself to an
investment consortium led by the Blackstone Group for $17.6 billion. Philips
Semiconductor was sold to Kohlberg Kravis Roberts Company and Silver Lake
Partners for $9.5 billion on Aug. 3.
Although the RDG Capital's preliminary overture was rejected by Perlegos, RDG
Capital head Russell Glass told MarketWatch in August he's still interested in
pursuing a transaction. When reached for this article, Glass declined comment.
Perlegos, who owns about 7% of Atmel shares, was fired along with his brother
Gust by the company's board on Aug. 7, allegedly for misusing corporate travel
funds. However, the brothers have sued Atmel for wrongful termination, saying
they were victims of an airfare booking scheme carried out by a former employee.
A hearing on the matter is tentatively slated for Oct. 17 in Delaware Chancery
Court. Atmel is based in San Jose, Calif.
Regardless of what happens in court, Perlegos will have a say in any sale of
the company, as he still owns 6.9% of Atmel's outstanding shares.
Stephen Norman, an attorney for Perlegos, declined comment on whether his
client was putting together a bid for Atmel.
Perlegos' meetings with potential investors, combined with his lawsuit, which
seeks his re-instatement as CEO and brother Gust as executive vice president, is
part of a two-pronged approach to retake control of the company he founded with
$23,000 of his own funds in 1984, according to these same sources.
Atmel's board fired the brothers, alleging they used corporate funds to pay
for 400 airline tickets for their family, friends and themselves, according to
In their lawsuit, the Perlegos' claim they were ousted for other reasons but
don't explicitly state those reasons. They claim they - and others - were
victims of an airfare booking scheme carried out by a former employee, according
to the lawsuit.
In recent weeks, private equity players have been holding discussions with
company management and board members, according to the sources.
Potential bidders for Atmel are waiting for the Delaware court to issue its
ruling, the sources say. The chipmaker's new management team is led by Steve
Laub, a former partner at Golden Gate Capital, a San Francisco-based private
equity firm, will
A phone call to Atmel was not immediately returned for comment.
The advantage to buying Atmel is the opportunity to cut costs, industry
One way is to sell off the company's factories and outsource its chip
manufacturing to a third-party. Atmel has sold two factories in France in the
past 10 months and still owns 6 facilities stretching from Germany to the
Philippines. One of those sites is an idle, 650,000 square foot factory in the
Dallas, Tex.-area; the property is on the market.
Other costs could be cut by jettisoning business lines where competition is
too tough. Atmel makes memory chips, logic chips, radio frequency chips and
The company's microcontroller division is seen as its most promising venture,
selling to a range of markets. Its microcontrollers are used in consumer,
automotive, industrial, and aerospace products.