Dialog Semiconductor Plc’s stock price declined 19% after the chipmaker firm reported a cash-and-stock deal to acquire Atmel Corporation (NASDAQ:ATML), reducing the offering value and increasing the prospects that another potential buyer can come with a counterbid. The chipmaker is proposing $10.42 per share for Atmel, $4.65 per share in cash and 0.112 of its American depository share for each Atmel stock. However, the decline on Monday lowered the bid to almost $9.26 a share.

Steven Laub, the CEO of Atmel, said that there was noteworthy interest for the company. He didn’t witness any other prospective buyers. The deal prior to the share decline values the company at $4.6 billion.

The market

The chip industry is witnessing the period of mergers and acquisitions as firms look to increase scale to deal with increasing costs and slowing growth. Atmel, which develops chips for the industrial equipments and for automotive industry, had also received a proposal from China Electronics Corp. Suji De Silva of Topeka Capital Markets Inc, said that the company is a worthwhile asset and there are parties interested in the company. He added that the prospective bids may return into the money.

Keith Moore of FBN Securities Inc. said that the stock momentum recorded in acquirer’s stock on Monday enhances the probability of speculation that at least one of the bidders that was inclined to acquire Atmel might return. Clearly, the movement in the stock has turned the offer value a lot less.

The expectations

Investors consider Dialog Semiconductor’s offer for Atmel high, requiring new stock and debt to finance the acquisition bid. The deal places a premium of 43% on Atmel, measured on ATML’s closing price on Friday. The strategic acquirers on average paid 19% premium in comparable chip-industry deals in the past twelve months.

In last trading session, the stock price of Atmel Corporation (NASDAQ:ATML) declined 2.20% to close at $8.01.