Form S-4
Table of Contents

As filed with the Securities and Exchange Commission on February 11, 2016

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

MICROCHIP TECHNOLOGY INCORPORATED

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   3674   86-0629024

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

2355 West Chandler Boulevard

Chandler, Arizona 85224

(480) 792-7200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Steve Sanghi

President and Chief Executive Officer

Microchip Technology Incorporated

2355 West Chandler Boulevard

Chandler, Arizona 85224

(480) 792-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Robert Ishii, Esq.

J. Robert Suffoletta, Esq.

Wilson Sonsini Goodrich & Rosati

Professional Corporation

One Market Street – Suite 3300

San Francisco, CA 94105

(415) 947-2000

  

Scott Wornow, Esq.

Senior Vice President and Chief

Legal Officer

Atmel Corporation

1600 Technology Drive

San Jose, California 95110

(408) 441-0311

 

Khoa D. Do, Esq.

Daniel R. Mitz, Esq.

Kevin B. Espinola, Esq.

Jones Day

1755 Embarcadero Road

Palo Alto, California 94303

(650) 739-3939

 

 

Approximate date of commencement of the proposed sale of the securities to the public:

As soon as practicable after this registration statement becomes effective and upon completion of the Merger described in the enclosed document.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)  ¨

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class

of securities to be registered

  Amount to be
registered (1)
  Proposed maximum
offering price per unit
  Proposed maximum
aggregate offering price (2)
 

Amount of

registration fee (3)(4)

Common Stock, par value $0.001 per share

  13,000,000       $479,224,520.25   $48,257.91

 

 

(1) Represents the maximum number of shares of Microchip Technology Incorporated (“Microchip”) common stock (“Microchip common stock”) to be issuable upon consummation of the merger described herein (the “Merger”).
(2) Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is an amount equal to (a) $3,674,054,655.25, calculated as the product of (i) 456,404,305 shares of common stock, par value $.001 per share (“Atmel common stock”), of Atmel Corporation (“Atmel”) that may be canceled in the Merger and exchanged for shares of Microchip common stock (calculated as the sum of (X) 421,332,253, the aggregate number of shares of Atmel common stock outstanding as of January 31, 2016, (Y) 17,769,032, the aggregate number of shares of Atmel common stock issuable pursuant to the exercise or settlement of Atmel options and restricted stock units, outstanding on January 31, 2016 that are or may become issuable upon exercise or settlement, as the case may be, prior to completion of the Merger, and (Z) 17,303,020, the aggregate number of shares of Atmel common stock that would be issued by Atmel under its Employee Stock Purchase Plan if all shares available for purchase are purchased), and (ii) $8.05, the average of the high and low trading prices of the Atmel common stock on February 5, 2016, minus (b) $3,194,830,135, the estimated aggregate amount of cash to be paid by Microchip to Atmel stockholders in the Merger, calculated as a product of (i) 456,404,305 shares of Atmel common stock, the estimated maximum number of shares of Atmel common stock that may be canceled in the merger and exchanged for Microchip common stock (calculated as shown in subsection (a) above), and (ii) $7.00, the cash portion of the merger consideration.
(3) Calculated pursuant to Rule 457 of the Securities Act by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001007.
(4) In accordance with Rule 457(p) under the Securities Act, the filing fee paid in connection with this registration statement is being offset partially against $32,380.75 of unused registration fee paid with respect to 5,687,020 shares of Common Stock of Microchip remaining unsold under the Registration Statement on Form S-4 (File No. 333-204463) filed by Microchip on May 27, 2015. As a result, the filing fee due in connection with this filing is $15,877.15.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS—SUBJECT TO COMPLETION,

DATED FEBRUARY 11, 2016

 

 

LOGO

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

Dear Atmel Stockholders:

Microchip Technology Incorporated (“Microchip”) and Atmel Corporation (“Atmel”) have entered into an Agreement and Plan of Merger, dated as of January 19, 2016 (the “Merger Agreement”), pursuant to which Microchip will acquire Atmel in a merger transaction (the “Merger”). If the Merger is completed, Atmel stockholders will receive, in exchange for each outstanding share of Atmel common stock owned immediately prior to the Merger (except for such shares held by Microchip, Atmel or their respective subsidiaries and except for dissenting shares) (1) $7.00 in cash without interest (the “Cash Consideration”), (2) $1.15 in Microchip common stock (valued at the average closing price for a share of Microchip common stock for the ten most recent trading days ending on the last trading day prior to the closing of the Merger (the “Closing”)), subject to the conditions and restrictions set forth in the Merger Agreement (the “Stock Consideration”), and (3) cash in lieu of fractional shares of Microchip common stock as contemplated by the Merger Agreement (together, the “Merger Consideration”). The maximum number of shares of Microchip common stock that will be issued in connection with the Merger is 13.0 million shares. To the extent that the number of shares of Microchip common stock issuable in the Merger would exceed 13.0 million shares, the Cash Consideration will be increased such that the value of the combined Cash Consideration and Stock Consideration will remain at $8.15 per share (based upon the average price described in the previous sentence) (any such increase, the “Supplemental Cash Consideration”).

Based on the number of shares of Atmel common stock outstanding as of January 31, 2016, and the number of shares of Microchip common stock outstanding as of January 31, 2016, and assuming a ten-trading day average closing price of $43.17 (calculated based on the closing prices for the ten trading days ended on February 8, 2016, the most recent practicable range of trading days prior to the date of this proxy statement/prospectus), it is expected that, immediately after completion of the Merger, former Atmel stockholders will receive shares of Microchip common stock in the Merger representing approximately 5.23% of the outstanding shares of Microchip common stock. The shares of Microchip common stock are traded, and following the Merger will continue to be traded, on The NASDAQ Stock Market (“NASDAQ”) under the symbol “MCHP.”

The Merger Consideration represents a premium to Atmel stockholders of approximately 12% over Atmel’s closing stock price on September 18, 2015 (the last trading day before Atmel announced it had entered into a merger agreement with Dialog Semiconductor plc (“Dialog”), which merger agreement was subsequently terminated by Atmel) and approximately 9% over Atmel’s closing stock price on May 5, 2015, the day prior to the public announcement that Atmel’s President and Chief Executive Officer, Steven Laub, had informed the Atmel Board that he intended to retire as an officer and director of Atmel.

Atmel will hold a special meeting of its stockholders to vote on matters related to the proposed Merger. The special meeting will be held on [●], 2016, at 8:00 a.m., local time, at Atmel’s headquarters located at 1600 Technology Drive, San Jose, California 95110. At the special meeting, Atmel stockholders will be asked to adopt the Merger Agreement. In addition, Atmel stockholders will be asked to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger and to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the Merger Agreement.

The exchange of the Merger Consideration for Atmel common stock in the Merger is expected to be a taxable transaction to Atmel stockholders for U.S. federal income tax purposes and may also be taxable under state, local and non-U.S. income and other tax laws. We encourage Atmel stockholders to carefully review the information under the heading “Material U.S. Federal Income Tax Consequences” of this proxy statement/prospectus for a description of certain U.S. tax consequences of the Merger.


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We cannot complete the Merger without the adoption of the Merger Agreement by Atmel stockholders. It is important that your shares be represented and voted regardless of the size of your holdings. A failure to vote will have the same effect as a vote “AGAINST” the adoption of the Merger Agreement. Whether or not you plan to attend the special meeting, we urge you to submit a proxy to have your shares voted in advance of the special meeting by using one of the methods described in the accompanying proxy statement/prospectus.

The board of directors of Atmel (the “Atmel Board”) recommends that Atmel stockholders vote:

 

  1. FOR” the adoption of the Merger Agreement;

 

  2. FOR” the approval, on a non-binding, advisory basis, of the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger; and

 

  3, FOR” the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the Merger Agreement.

The accompanying proxy statement/prospectus provides important information regarding the special meeting and a detailed description of the Merger Agreement, the Merger and the matters to be presented at the special meeting. We urge you to read the accompanying proxy statement/prospectus carefully and in its entirety. Please pay particular attention to the section entitled “Risk Factors” beginning on page 32 of the accompanying proxy statement/prospectus.

We look forward to seeing you at the special meeting and thank you for your continued support of, and interest in, Atmel.

Sincerely,

 

Steven Laub

President and Chief Executive Officer

[●], 2016

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger or the securities to be issued in connection with the Merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated February [●], 2016 and is first being mailed to Atmel stockholders on or about [●], 2016.


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ATMEL CORPORATION

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

Date:

     [●], 2016

Time:

     8:00 a.m., local time

Place:

     1600 Technology Drive, San Jose, California 95110

Items of Business:

     1.       Merger Proposal: To vote on a proposal (the “Merger Proposal”) to adopt the Agreement and Plan of Merger, dated as of January 19, 2016 (the “Merger Agreement”), among Atmel Corporation (“Atmel”), Microchip Technology Incorporated, a Delaware corporation (“Microchip”), and Hero Acquisition Corporation, a Delaware corporation and an indirect wholly owned subsidiary of Microchip (“Merger Sub”), which provides for the merger of Merger Sub with and into Atmel, with Atmel surviving the merger as an indirect wholly owned subsidiary of Microchip (the “Merger”).
     2.       Non-Binding, Advisory Approval of Compensation Payments. To vote on a proposal (the “Compensation Proposal”) to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger.
     3.       Adjournment of the Special Meeting. To vote on a proposal (the “Adjournment Proposal”) to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal.
    
 
Atmel will transact no other business at the special meeting, except for business properly
brought before the special meeting or any adjournment or postponement thereof.

Record Date:

    
 
 
Only Atmel stockholders of record at the close of business on [●], 2016 (the “Record
Date”) may vote at the special meeting or at any postponement or adjournment of the
meeting.
Recommendations of the Atmel Board of Directors:     
 
 
The Atmel Board of Directors recommends that Atmel stockholders vote “FOR” the
Merger Proposal; “FOR” the Compensation Proposal; and “FOR” the Adjournment
Proposal.

Please carefully read the accompanying proxy statement/prospectus, which describes the matters to be voted upon at the special meeting and how to vote your shares. Your vote is very important. To ensure your representation at the special meeting, please promptly complete and return the enclosed proxy card or submit your proxy by telephone or through the Internet.

BY ORDER OF THE BOARD OF DIRECTORS

Steven Laub

President and Chief Executive Officer

This Notice of Special Meeting of Stockholders is being distributed and made available on or about [●], 2016


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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates by reference important business and financial information about Microchip and Atmel from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference into this proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Microchip Technology Incorporated

2355 West Chandler Boulevard

Chandler, Arizona 85224

Telephone: (480) 792-7200

Attn: Investor Relations

 

Atmel Corporation

1600 Technology Drive

San Jose, California 95110

Telephone: (408) 441-0311

  or
 

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders call toll-free: (888) 750-5834

Banks and brokers call collect: (212) 750-5833

Investors may also consult Microchip’s and Atmel’s websites for more information concerning the Merger described in this proxy statement/prospectus. Microchip’s website is www.microchip.com and Atmel’s website is www.atmel.com. Information included on these websites is not incorporated by reference into this proxy statement/prospectus.

In addition, if you have questions about the Merger, the special meeting, or the proposals to be considered at the special meeting, need additional copies of this document and the annexes to this document, or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Atmel’s proxy solicitor, Innisfree M&A Incorporated, at the address and telephone number set forth above.

If you would like to request any documents, please do so by [], 2016 in order to receive them before the special meeting.

For more information, please see the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the United States Securities and Exchange Commission (the “SEC”) by Microchip, constitutes a prospectus of Microchip under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Microchip common stock to be issued pursuant to the Merger. This proxy statement/prospectus also constitutes a proxy statement for Atmel under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. Microchip and Atmel take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you and, if given, such information must not be relied on as having been authorized. This proxy statement/prospectus is dated February [●], 2016. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our mailing of this proxy statement/prospectus to Atmel stockholders nor the issuance by Microchip of shares of Microchip common stock in connection with the Merger will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this proxy statement/prospectus regarding Microchip has been provided by Microchip and information contained in this proxy statement/prospectus regarding Atmel has been provided by Atmel.

All references in this proxy statement/prospectus to “Microchip” refer to Microchip Technology Incorporated, a Delaware corporation, and its consolidated subsidiaries, unless the context requires otherwise; all references in this proxy statement/prospectus to “Atmel” refer to Atmel Corporation, a Delaware corporation, and its consolidated subsidiaries, unless the context requires otherwise; all references to “Merger Sub” refer to Hero Acquisition Corporation, a Delaware corporation and indirect wholly owned subsidiary of Microchip formed for the sole purpose of effecting the Merger; unless otherwise indicated or as the context requires, all references in this proxy statement/prospectus to “we,” “our” and “us” refer to Microchip and Atmel, collectively; unless otherwise indicated or as the context requires, all references to the “Merger Agreement” refer to the Agreement and Plan of Merger dated as of January 19, 2016 by and among Microchip, Merger Sub and Atmel, a copy of which is included as Annex A to this proxy statement/prospectus. All summaries of, and references to, the agreement governing the terms of the transactions described in this proxy statement/prospectus are qualified by the full copy of and complete text of such agreement in the form attached hereto as an annex. Also, in this proxy statement/prospectus, “$” refers to U.S. dollars.

Atmel stockholders should not construe the contents of this proxy statement/prospectus as legal, tax or financial advice. Atmel stockholders should consult with their own legal, tax, financial or other professional advisors.

 

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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     v   

SUMMARY

     1   

The Companies

     1   

Comparative per Share Market Price and Dividend Information

     2   

Risk Factors

     2   

The Atmel Special Meeting

     2   

The Merger

     3   

The Merger Agreement

     5   

Dividends

     12   

Material U.S. Federal Income Tax Consequences

     12   

Accounting Treatment

     13   

Comparison of Stockholders’ Rights

     13   

THE COMPANIES

     14   

Microchip Technology Incorporated

     14   

Atmel Corporation

     14   

Hero Acquisition Corporation

     14   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MICROCHIP

     15   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATMEL

     17   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     19   

UNAUDITED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

     28   

COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION (UNAUDITED)

     30   

Historical Market Price Information

     30   

Recent Closing Prices and Comparative Market Price Information

     30   

Dividend Policy

     31   

RISK FACTORS

     32   

Risk Factors Relating to the Merger

     32   

Risk Factors Related to Microchip Following the Merger

     37   

Other Risk Factors of Microchip and Atmel

     41   

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     42   

THE ATMEL SPECIAL MEETING

     44   

Date, Time and Location

     44   

Purpose

     44   

Recommendation of the Atmel Board

     44   

Record Date and Quorum

     44   

Required Vote

     45   

Share Ownership and Voting by Atmel Directors and Executive Officers

     45   

Voting of Shares

     46   

Revocation of Proxies

     47   

Solicitation of Proxies; Costs of Solicitation

     47   

Tabulation of Votes

     47   

Adjournments and Postponements

     47   

Attending the Special Meeting

     48   

Assistance

     49   

PROPOSAL 1: THE MERGER PROPOSAL

     50   

Required Vote

     50   

Recommendation of the Atmel Board

     50   

PROPOSAL 2: THE COMPENSATION PROPOSAL

     51   

Required Vote

     51   

Recommendation of the Atmel Board

     51   

 

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PROPOSAL 3: THE ADJOURNMENT PROPOSAL

     52   

Required Vote

     52   

Recommendation of the Atmel Board

     52   

THE MERGER

     53   

Effects of the Merger

     53   

Background of the Merger

     53   

Recommendation of the Atmel Board; Atmel’s Reasons for the Merger

     71   

Opinion of Atmel’s Financial Advisor

     78   

Certain Unaudited Prospective Financial Information Reviewed by the Atmel Board and Atmel’s Financial Advisor

     85   

Interests of Atmel’s Directors and Executive Officers in the Merger

     88   

Treatment of Atmel Options and Other Equity-Based Awards

     93   

Regulatory Clearances Required for the Merger

     94   

Dividends

     94   

Listing of Shares of Microchip Common Stock

     94   

Delisting and Deregistration of Atmel Common Stock

     95   

Appraisal Rights

     95   

THE MERGER AGREEMENT

     99   

The Merger

     99   

Merger Consideration

     99   

Treatment of Atmel Options and Other Equity-Based Awards

     100   

Closing and Effective Time

     100   

Conversion of Shares

     101   

Exchange Agent; Letter of Transmittal

     101   

Appraisal Rights

     102   

Withholding

     102   

Dividends and Distributions

     102   

Representations and Warranties of Microchip, Merger Sub and Atmel

     102   

Material Adverse Effect

     105   

Restrictions on Atmel’s Business Pending the Closing

     106   

Atmel’s Agreement Not to Solicit Other Offers

     108   

Atmel’s Agreement Not to Change the Atmel Board Recommendation

     110   

Preparation of the Form S-4 and the Proxy Statement/Prospectus; Atmel Special Meeting

     111   

Reasonable Best Efforts

     111   

Employee Matters

     112   

Indemnification and Insurance

     113   

Regulatory Filings

     114   

Stock Exchange Listing

     114   

Financing

     114   

Litigation Related to the Transaction

     117   

Dialog Termination Fee

     117   

Other Agreements

     117   

Conditions to Closing

     117   

Termination of the Merger Agreement

     119   

Termination Fees

     120   

Effect of Termination

     121   

Expenses

     121   

Amendment

     121   

Governing Law

     121   

Specific Performance

     121   

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     123   

General

     123   

U.S. Holders

     123   

Non-U.S. Holders

     124   

Backup Withholding and Information Reporting

     125   

ACCOUNTING TREATMENT

     126   

ATMEL SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     126   

DESCRIPTION OF MICROCHIP CAPITAL STOCK

     128   

Common Stock

     128   

Preferred Stock

     128   

COMPARISON OF STOCKHOLDERS’ RIGHTS

     129   

LEGAL MATTERS

     135   

EXPERTS

     135   

Microchip

     135   

Atmel

     135   

FUTURE STOCKHOLDER PROPOSALS

     135   

Microchip

     135   

Atmel

     136   

HOUSEHOLDING OF PROXY STATEMENT/PROSPECTUS

     136   

OTHER MATTERS

     137   

WHERE YOU CAN FIND MORE INFORMATION

     137   
Annex A — Merger Agreement   
Annex B — Opinion of Qatalyst Partners LP   
Annex C — Section 262 of the Delaware General Corporation Law   

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of Atmel Corporation (“Atmel”) may have regarding the Merger and the other matters being considered at the special meeting and the answers to those questions. Microchip Technology Incorporated (“Microchip”) and Atmel urge you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger and the other matters being considered at the special meeting. Additional important information is also contained in the Annexes to, and the documents incorporated by reference into, this proxy statement/prospectus.

General Questions and Answers about the Merger

 

Q: What is the proposed transaction on which I am being asked to vote?

 

A: You are being asked to vote to adopt the Agreement and Plan of Merger, dated as of January 19, 2016 (the “Merger Agreement”), entered into by and among Microchip, Hero Acquisition Corporation, an indirect wholly owned subsidiary of Microchip (“Merger Sub”), and Atmel. A copy of the Merger Agreement is included as Annex A to this proxy statement/prospectus. Pursuant to the Merger Agreement, Merger Sub will merge with and into Atmel, with Atmel surviving the merger as an indirect wholly owned subsidiary of Microchip (the “Merger”).

The Merger cannot be completed unless, among other things, holders of a majority of the shares of the outstanding Atmel common stock as of the Record Date (as defined below) for the special meeting of Atmel stockholders (the “special meeting”) vote to adopt the Merger Agreement. See the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 117 of this proxy statement/prospectus for more information.

Atmel stockholders will also be asked to approve the Adjournment Proposal and the Compensation Proposal, both as defined below in the section entitled “—What are the proposals on which the Atmel stockholders are being asked to vote?”

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: This proxy statement/prospectus contains important information about the Merger and the other proposals being voted on at the special meeting, and you should read it carefully. It is a proxy statement because the Atmel Board of Directors (the “Atmel Board”) is soliciting proxies from its stockholders. It is a prospectus because Microchip will issue shares of Microchip common stock in connection with the Merger. The enclosed materials allow you to have your shares voted by proxy without attending the special meeting in person. Your vote is important. We encourage you to submit your proxy as soon as possible.

 

Q: What will Atmel stockholders receive for their shares of common stock in the Merger?

 

A:

If the Merger is completed, Atmel stockholders will be entitled to receive, in exchange for each share of Atmel common stock they hold at the Effective Time (as defined below) of the Merger, Merger Consideration (as defined below) equal to $8.15 per share, subject to adjustment in certain cases as further discussed under “The Merger Agreement—The Merger” beginning on page 99 of this proxy statement/prospectus. Atmel stockholders will have the right to receive (1) $7.00 in cash without interest (the “Cash Consideration”), (2) $1.15 in Microchip common stock (valued at the average closing price for a share of Microchip common stock for the ten most recent trading days ending on the last trading day prior to the closing of the Merger (the “Closing”)), subject to the conditions and restrictions set forth in the Merger Agreement (the “Stock Consideration”), and (3) cash in lieu of fractional shares of Microchip common stock as contemplated by the Merger Agreement (together, the “Merger Consideration”). The maximum number of shares of Microchip common stock that will be issued in connection with the Merger is 13.0 million shares, and to the extent that the number of shares of Microchip common stock issuable in the

 

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  Merger would exceed 13.0 million shares, the Cash Consideration per share of Atmel common stock will be increased such that the value of the combined Cash Consideration and Stock Consideration will remain at $8.15 per share (based upon the average price described in the previous sentence) (any such increase, the “Supplemental Cash Consideration”).

 

Q: After the Merger, how much of Microchip will Atmel stockholders own?

 

A: Based on the number of shares of Atmel common stock outstanding as of January 31, 2016, and the number of shares of Microchip common stock outstanding as of January 31, 2016, and assuming a ten-trading day average closing price of $43.17 (calculated based on the closing prices for the ten trading days ended on February 8, 2016, the most recent practicable range of trading days prior to the date of this proxy statement/prospectus), it is expected that, immediately after completion of the Merger, former Atmel stockholders will receive shares of Microchip common stock in the Merger representing approximately 5.23% of the outstanding shares of Microchip common stock.

 

Q: Will Atmel stockholders be able to trade the shares of Microchip common stock that they receive in the transaction?

 

A: Yes. Shares of Microchip common stock are listed on NASDAQ under the symbol “MCHP.” Shares of Microchip common stock received in exchange for shares of Atmel common stock in the Merger will be freely transferable under U.S. federal securities laws.

 

Q: What will I receive in the Merger in exchange for my equity awards?

 

A: Immediately prior to the Effective Time, each outstanding option to purchase shares of Atmel common stock (each, an “Atmel Option”), whether vested or not, will accelerate and become vested and exercisable in full. To the extent that such Atmel Options are not exercised voluntarily by the date immediately preceding the Effective Time, such Atmel Options will be automatically “net-exercised” (with the exercise price and applicable withholding taxes paid by withholding Atmel common stock otherwise issuable to such option holder). Upon such exercise, the former holder of the Atmel Option will be issued the net number of shares of Atmel common stock resulting from the “net exercise,” and such stockholder will thereafter be entitled to receive the Merger Consideration in respect of these shares of Atmel common stock. Any Atmel Option with an exercise price greater than the Merger Consideration will be cancelled at the Effective Time for no consideration. No former Atmel Options will remain outstanding following the consummation of the Merger.

Each outstanding restricted stock unit, deferred stock unit, performance-based restricted stock unit or similar right with respect to Atmel common stock (including “performance share awards” denominated in restricted stock units) (each, an “Atmel Unit”) that is held by an individual who will continue in service with Microchip at the Effective Time will be assumed by Microchip and converted into equivalent awards in respect of shares of Microchip common stock using a customary exchange ratio intended to provide in respect of the Atmel Unit value equivalent to the Merger Consideration as of the Effective Time.

In addition, any vested Atmel Units will be treated as outstanding Atmel common stock in the Merger, and the holders of such vested Atmel Units that have not received the underlying shares of Atmel common stock at the Effective Time will receive the Merger Consideration (subject to applicable tax withholding). No Atmel Units will remain outstanding following the consummation of the Merger.

 

Q: What is required to complete the Merger?

 

A:

Each of Microchip’s and Atmel’s obligation to consummate the Merger is subject, as relevant, to a number of conditions specified in the Merger Agreement, including the following: (1) adoption of the Merger Agreement by Atmel’s stockholders; (2) approval for listing on NASDAQ of the shares of Microchip

 

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  common stock to be issued in the Merger, subject to official notice of issuance; (3) receipt of customary antitrust approvals; (4) absence of laws, orders, judgments and injunctions that enjoin or otherwise prohibit consummation of the Merger or any proceedings instituted by a governmental entity with competent jurisdiction seeking any of the foregoing; (5) effectiveness under the Securities Act of this registration statement on Form S-4 (the “Form S-4”); (6) subject to certain materiality related standards contained in the Merger Agreement, the accuracy of representations and warranties of Atmel and Microchip, respectively, and material performance by Atmel and Microchip of their respective covenants contained in the Merger Agreement; and (7) the absence of a material adverse effect with respect to the other party. The consummation of the Merger is not subject to a financing condition. See the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 117 of this proxy statement/prospectus.

 

Q: When do you expect the Merger to be completed?

 

A: Microchip and Atmel expect the Closing to occur in the second quarter of calendar year 2016. However, the Merger is subject to various regulatory approvals and the satisfaction or waiver of other conditions, and it is possible that factors outside the control of Microchip and Atmel could result in the Merger being completed at an earlier time, a later time or not at all. There may be a substantial amount of time between the date on which the special meeting is held and the date of the completion of the Merger. The Merger will become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware on the date that the Closing takes place (the “Closing Date”), or at such subsequent date or time as Atmel, Microchip and Merger Sub agree and specify in the certificate of merger (the “Effective Time”).

 

Q: Will I be subject to U.S. federal income tax upon the exchange of shares of Atmel common stock for the Merger Consideration?

 

A: If you are a U.S. Holder (as defined below), the exchange of your shares of Atmel common stock for cash and shares of Microchip common stock in the Merger will be a taxable transaction for U.S. federal income tax purposes, which generally will require you to recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the sum of the amount of cash and the fair market value of the shares of Microchip common stock you receive in the Merger and your tax basis in the shares of Atmel common stock exchanged in the Merger.

If you are a Non-U.S. Holder (as defined below), you generally will not be subject to U.S. federal income tax with respect to the exchange of shares of Atmel common stock for cash and shares of Microchip common stock in the Merger, unless you have certain connections to the United States.

Because particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax consequences to you relating to the Merger in light of your own particular circumstances and the consequences to you arising under U.S. federal non-income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction. A more complete description of material U.S. federal income tax consequences of the Merger is provided in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 123 of this proxy statement/prospectus.

 

Q: What happens if the Merger is not completed?

 

A: If the Merger Agreement is not adopted by Atmel stockholders or if the Merger is not completed for any other reason, Atmel stockholders will not receive the Merger Consideration in exchange for their shares of Atmel common stock. Instead, Atmel will remain an independent public company and Atmel common stock will continue to be listed and traded on NASDAQ. Under specified circumstances, Atmel may be required to pay Microchip a termination fee or reimburse Microchip’s transaction expenses, or Microchip may be required to pay Atmel a termination fee, as described in the section entitled “The Merger Agreement—Termination Fees” beginning on page 120 of this proxy statement/prospectus.

 

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Q: What do I need to do?

 

A: After you have carefully read and considered the information contained in, or incorporated by reference into, this proxy statement/prospectus, please vote by submitting your proxy card or voting instruction form by following the instructions set forth below under the section entitled “Questions and Answers about the Special Meeting—How do I vote?”

Questions and Answers about the Special Meeting

 

Q: When and where will the special meeting be held?

 

A: The special meeting will be held on [●], 2016 at 8:00 a.m., local time, at Atmel’s headquarters located at 1600 Technology Drive, San Jose, California 95110.

 

Q: Who is soliciting my proxy to vote at the special meeting?

 

A: The Atmel Board is soliciting your proxy to vote at the special meeting. This proxy statement/prospectus summarizes the information you need to know to vote on the proposals to be presented at the special meeting.

 

Q: Who is entitled to vote?

 

A: Only holders of record of Atmel common stock at the close of business on [●], 2016, the record date for the meeting (the “Record Date”), are entitled to notice of, and to vote at, the special meeting and any postponements or adjournments of the meeting. On the Record Date, [●] shares of Atmel common stock were issued and outstanding and no shares of Atmel’s preferred stock were outstanding.

 

Q: What are the proposals on which I am being asked to vote?

 

A: There are three proposals that will be voted on at the special meeting:

 

    Merger Proposal: The proposal to adopt the Merger Agreement, which provides for the merger of Merger Sub with and into Atmel, with Atmel surviving the merger as an indirect wholly owned subsidiary of Microchip (the “Merger Proposal”).

 

    Compensation Proposal: The proposal to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger (the “Compensation Proposal”).

 

    Adjournment Proposal: The proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal (the “Adjournment Proposal”).

Approval by stockholders of Atmel of the Merger Proposal (the “Atmel Stockholder Approval”) is required for completion of the Merger. Approval by Atmel stockholders of the Compensation Proposal and the Adjournment Proposal is not required for completion of the Merger. No other matters are intended to be brought before the special meeting by Atmel.

 

Q: What vote is required for approval of the proposals in this proxy statement/prospectus, and what happens if I abstain?

 

A: The following are the vote requirements:

 

   

Merger Proposal: The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date is required to approve

 

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the Merger Proposal. If you abstain from voting, fail to vote at the special meeting, or fail to instruct your broker, bank or other nominee how to vote on the Merger Proposal, it will have the same effect as a vote cast against the Merger Proposal.

 

    Compensation Proposal: The affirmative vote, in person or by proxy, of holders of a majority of the shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote thereon is required to approve the Compensation Proposal. If you abstain from voting or attend the special meeting and fail to vote, it will have the same effect as a vote cast against the Compensation Proposal. If you do not attend the special meeting or fail to instruct your broker, bank or other nominee how to vote on the Compensation Proposal, it will have no effect on the outcome of the vote on the Compensation Proposal, assuming a quorum is present.

 

    Adjournment Proposal: The affirmative vote, in person or by proxy, of holders of a majority of the shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote thereon is required to approve the Adjournment Proposal. If you abstain from voting or attend the special meeting and fail to vote, it will have the same effect as a vote cast against the Adjournment Proposal. If you do not attend the special meeting or fail to instruct your broker, bank or other nominee how to vote on the Adjournment Proposal, it will have no effect on the outcome of the vote on the Adjournment Proposal, assuming a quorum is present.

 

Q: How does the Atmel Board recommend that I vote my shares of Atmel common stock on the proposals?

 

A: The Atmel Board recommends that stockholders vote their shares of Atmel common stock:

 

    “FOR” the Merger Proposal;

 

    “FOR” the Compensation Proposal; and

 

    “FOR” the Adjournment Proposal.

 

Q: How do I vote?

 

A: If you are a stockholder of record of Atmel as of the Record Date:

 

    You may vote in person at the special meeting; or

 

    You may vote by completing, signing, dating and mailing the enclosed proxy card in the envelope provided, or by submitting a proxy by telephone or over the Internet by following the instructions on the enclosed proxy card.

If your shares of Atmel common stock are held in the name of your broker, bank or other nominee, you should submit voting instructions to your broker, bank or other nominee. Please refer to the voting instruction card included in these proxy materials by your broker, bank or other nominee or contact your broker, bank or other nominees to obtain instructions on how to instruct them with respect to the voting of your shares.

 

Q: If my shares are held in a stock brokerage account, or in “street name” by my broker, bank or nominee, will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial holder, unless your broker, bank or other nominee has discretionary authority over your shares, you generally have the right to direct your broker, bank or other nominee as to how to vote your shares. You can contact your broker, bank or other nominees to obtain instructions on how to instruct them with respect to the voting of your shares. If you do not provide voting

 

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  instructions, your shares will not be counted in determining whether a quorum is present at the special meeting or be voted on any proposal on which your broker, bank or other nominee does not have discretionary authority. This is often called a “broker non-vote.” In order to avoid broker non-votes with respect to your shares of Atmel common stock, you should provide your broker, bank or other nominee with instructions as to how to vote your shares of Atmel common stock.

Please note that you may not vote shares held in street name by returning a proxy card directly to Atmel or by voting in person at the special meeting unless you first obtain a proxy from your broker, bank or other nominee. Please follow the voting instructions provided by your broker, bank or other nominee so that it may vote your shares on your behalf.

 

Q: How many votes do I have?

 

A: Atmel stockholders are entitled to cast one vote for each share of Atmel common stock held as of the Record Date on all matters properly submitted for voting. On the Record Date, [●] shares of Atmel common stock were issued and outstanding and no shares of Atmel’s preferred stock were outstanding.

 

Q: What if I sell my shares of Atmel common stock before the special meeting?

 

A: If you transfer your shares of Atmel common stock after the Record Date but before the special meeting, you will, unless you provide the transferee of your shares with a proxy, retain your right to vote at the special meeting, but will have transferred the right to receive the Merger Consideration. In order to receive the Merger Consideration, you must hold your shares through the Effective Time.

 

Q: What does it mean if I get more than one proxy card to vote my shares of Atmel common stock?

 

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple paper proxy cards or voting instruction cards. For example, if you hold your shares of Atmel common stock in more than one brokerage account, you may receive a set of proxy materials for each brokerage account in which you hold shares. If you are an Atmel stockholder of record and your shares of Atmel common stock are registered in more than one name, you will receive more than one set of proxy materials. Please sign, date and return each proxy card and voting instruction card that you receive and follow the voting instructions set forth in this proxy statement/prospectus to ensure that all your shares of Atmel common stock are voted.

 

Q: Can I change my vote?

 

A: Yes, if you are a stockholder of record as of the Record Date, you may change your vote: (1) by delivering to Atmel (Attention: Corporate Secretary, 1600 Technology Drive, San Jose, California 95110), prior to your shares being voted at the special meeting, a later dated written notice of revocation or a later dated duly executed proxy card; or (2) by attending the special meeting and voting in person (although attendance at the special meeting will not, by itself, revoke a proxy). A stockholder of record who has voted on the Internet or by telephone may also change his or her vote by subsequently making a timely and valid Internet or telephone vote.

If you are a beneficial owner of shares held in “street name” by a broker, bank or other nominee, you may revoke your proxy and vote your shares in person at the special meeting only in accordance with applicable rules and procedures as employed by such broker, bank or other nominee. If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

Q: How many shares must be present to hold the special meeting?

 

A:

Holders of a majority in voting power of the issued and outstanding shares of Atmel common stock entitled to vote at the special meeting must be present in person or represented by proxy at the special meeting in

 

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  order to have the required quorum for transacting business. Stockholders are counted as present at the meeting if they (1) are present in person at the special meeting; or (2) have properly submitted a proxy card or submitted a proxy by telephone or over the Internet. Abstaining votes are considered present and entitled to vote and, therefore, are included for purposes of determining whether a quorum is present at the special meeting. Broker non-votes are not entitled to vote and, therefore, are not included for purposes of determining whether a quorum is present at the special meeting.

 

Q: Are Atmel stockholders entitled to appraisal rights?

 

A: Record holders of Atmel common stock who do not vote in favor of the Merger Proposal and otherwise comply with the requirements and procedures of Section 262 of the Delaware General Corporation Law (the “DGCL”), are entitled to exercise appraisal rights, which generally entitle stockholders to receive in lieu of the Merger Consideration a cash payment of an amount determined by the Court of Chancery of the State of Delaware (the “Court of Chancery”) to be the fair value of their Atmel common stock. The fair value of Atmel common stock could be less than, more than or the same as the Merger Consideration. A detailed description of the procedures required to be followed in order to perfect appraisal rights by Atmel stockholders if desired is included in the section entitled “The Merger—Appraisal Rights” beginning on page 95 of this proxy statement/prospectus. The full text of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. Due to the complexity of the procedures described above, Atmel stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel.

 

Q: Why am I being asked to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger?

 

A: The SEC has adopted rules that require Atmel to seek a non-binding, advisory vote on the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger. Atmel urges its stockholders to read the section entitled “The Merger—Interests of Atmel’s Directors and Executive Officers in the Merger” beginning on page 88 of this proxy statement/prospectus, which describes in more detail how Atmel’s compensation policies and procedures relating to its named executive officers operate and how they are designed to achieve Atmel’s compensation objectives.

 

Q: What happens if the proposal to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger is not approved?

 

A: Approval, on a non-binding, advisory basis, of the compensation payments that will or may be made by Atmel to Atmel’s named executive officers in connection with the Merger is not a condition to completion of the Merger. The vote is a non-binding, advisory vote and is therefore not binding on Atmel, the Atmel Board, the compensation committee of the Atmel Board, Microchip, Microchip’s Board of Directors (the “Microchip Board”) or the compensation committee of the Microchip Board. Since compensation and benefits to be paid or provided in connection with the Merger are based on contractual arrangements with the named executive officers, the outcome of this advisory vote will not affect the obligation to make these payments and these payments may still be made even if the Atmel stockholders do not approve, on a non-binding, advisory basis, the Compensation Proposal.

 

Q: Who pays for the solicitation of proxies to vote at the special meeting?

 

A:

Atmel will bear the entire cost of proxy solicitation, including preparation, assembly, printing and mailing of the notice of special meeting, proxy card, this proxy statement/prospectus and any additional materials furnished to Atmel stockholders. Copies of these materials will be furnished to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others to forward to those beneficial owners. In addition, Atmel may reimburse the costs of forwarding these materials to those

 

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  beneficial owners. Solicitation of proxies by mail may be supplemented by one or more of telephone, email, facsimile or personal solicitation by Atmel’s directors, officers or employees. No additional compensation will be paid for such services. Atmel has engaged Innisfree M&A Incorporated to aid in the solicitation of proxies from brokers, bank nominees and other institutional owners for approximately $25,000, plus reimbursement of related expenses.

 

Q: Should I send in my share certificate(s) now?

 

A: No. Please do not send any share certificates with your proxy card. After the Merger is completed, you will receive written instructions, including a letter of transmittal, for exchanging your shares of Atmel common stock for the cash payment and shares of Microchip common stock you are entitled to receive in connection with the Merger.

 

Q: Whom should I call if I have questions?

 

A: If you have questions or if you need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact Atmel’s proxy solicitor at:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders call toll-free: (888) 750-5834

Banks and brokers call collect: (212) 750-5833

You may also contact the Atmel Investor Relations department at:

Atmel Corporation

1600 Technology Drive

San Jose, California 95110

Telephone number: (408) 441-0311

 

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement/prospectus and may not contain all the information that is important to you with respect to the Merger and the other matters being considered at the special meeting. You are urged to read the remainder of this proxy statement/prospectus carefully, including the attached Annexes, and the other documents referred to or incorporated by reference herein. See also the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

The Companies

Microchip Technology Incorporated (see page 14)

Microchip is a leading provider of microcontroller, mixed-signal, analog and Flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Microchip develops, manufactures and sells specialized semiconductor products used by its customers for a wide variety of embedded control applications. Microchip’s product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety, security, wired connectivity and wireless connectivity devices, as well as serial EEPROMs, Serial Flash memories, Parallel Flash memories and serial SRAM memories. Microchip also licenses Flash-IP solutions that are incorporated in a broad range of products. Microchip’s synergistic product portfolio targets thousands of applications worldwide and a growing demand for high-performance designs in the automotive, communications, computing, consumer and industrial control markets. Microchip’s quality systems are ISO/TS16949 (2009 version) certified. Shares of Microchip common stock are traded on NASDAQ under the symbol “MCHP.” Following the Merger, shares of Microchip common stock will continue to be traded on NASDAQ under the symbol “MCHP.”

The principal executive offices of Microchip are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224, and its telephone number is (480) 792-7200. Additional information about Microchip and its subsidiaries is included in documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

Atmel Corporation (see page 14)

Atmel is one of the world’s leading suppliers of general purpose microcontrollers, which are self-contained computers-on-a-chip. This product focus has enabled Atmel to develop and maintain a diversified, global customer base that incorporates its semiconductors into industrial products, automotive systems, digital consumer products, mobile computing devices, communications networks, and other electronics in which its products provide embedded processing and critical interface functions.

The principal executive offices of Atmel are located at 1600 Technology Drive, San Jose, California 95110, and its telephone number is (408) 441-0311. Additional information about Atmel and its subsidiaries is included in documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

Hero Acquisition Corporation (see page 14)

Hero Acquisition Corporation (“Merger Sub”) is an indirect wholly owned subsidiary of Microchip and is a Delaware corporation. Merger Sub was formed on December 22, 2015, for the sole purpose of effecting the Merger. In the Merger, Merger Sub will be merged with and into Atmel, with Atmel surviving as an indirect wholly owned subsidiary of Microchip.

 



 

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The principal executive offices of Merger Sub are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224, and its telephone number is (480) 792-7200.

Comparative per Share Market Price and Dividend Information (see page 30)

Shares of Microchip’s common stock are listed for trading on NASDAQ under the symbol “MCHP” and shares of Atmel common stock are listed for trading on NASDAQ under the symbol “ATML.” The following table sets forth the closing sales prices of a share of Microchip common stock (as reported on NASDAQ) and of Atmel common stock (as reported on NASDAQ), each on January 15, 2016, the last trading day before the day on which Microchip and Atmel announced the execution of the Merger Agreement, and on February 8, 2016, the last practicable trading day before the date of this proxy statement/prospectus.

 

     Microchip
Common
Stock
Price per
Share
     Atmel
Common
Stock
Price per
Share
 

January 15, 2016

   $ 40.52       $ 7.90   

February 8, 2016

   $ 41.22       $ 8.05   

The market prices of Microchip common stock and Atmel common stock will fluctuate before the special meeting and before the Merger is consummated. You should obtain current stock price quotations from a newspaper, the Internet or your broker or banker.

Microchip’s Dividend Policy. The holders of Microchip common stock will receive dividends if and when declared by the Microchip Board out of legally available funds or, in the case of stock dividends, out of authorized and available shares of Microchip common stock. Microchip has been declaring and paying quarterly cash dividends on Microchip common stock since the third quarter of its fiscal year ending March 31, 2003. Microchip’s total cash dividends paid were $286.5 million, $281.2 million and $273.8 million in its fiscal years 2015, 2014 and 2013, respectively. The Microchip Board is free to change Microchip’s dividend practices at any time and to increase or decrease the dividend paid, or not to pay a dividend, on Microchip common stock on the basis of Microchip’s results of operations, financial condition, cash requirements and future prospects, and other factors deemed relevant by the Microchip Board. Microchip’s current intent is to provide for ongoing quarterly cash dividends depending upon market conditions and Microchip’s results of operations.

Atmel’s Dividend Policy. Prior to 2015, Atmel had never declared or paid any cash dividends on its capital stock. On February 4, 2015, Atmel announced the initiation of a quarterly cash dividend, commencing in the first quarter of 2015. The Merger Agreement prohibits Atmel from authorizing or paying dividends or making distributions on its capital stock, so Atmel does not expect to pay dividends for as long as the Merger Agreement is in effect. In addition, Atmel’s credit agreement limits its and its subsidiaries, ability to pay dividends or make any other distribution or payment on account of Atmel’s capital stock.

Risk Factors (see page 32)

Before voting at the special meeting, you should carefully consider all of the information contained in or incorporated by reference into this proxy statement/prospectus, as well as the specific factors included under the section entitled “Risk Factors” beginning on page 32 of this proxy statement/prospectus before deciding whether to vote for approval of the Merger Proposal.

The Atmel Special Meeting (see page 44)

The special meeting will be held on [●], 2016 at 8:00 a.m., local time, at Atmel’s headquarters located at 1600 Technology Drive, San Jose, California 95110.

 



 

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At the special meeting, holders of Atmel common stock as of the Record Date will be asked to consider and approve the following proposals:

 

  1. The Merger Proposal.

 

  2. The Compensation Proposal.

 

  3. The Adjournment Proposal.

Record Date and Quorum

Only Atmel stockholders of record as of the Record Date are entitled to notice of and to vote at the special meeting. As of the close of business on the Record Date, [●] shares of Atmel common stock were issued and outstanding and there were [●] holders of record of the common stock. Each Atmel stockholder is entitled to one vote for each share of Atmel common stock held by such stockholder as of the Record Date.

Holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date must be present in person or represented by proxy at the special meeting in order to have the required quorum for transacting business. Abstentions are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business.

Required Vote

The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date is required to approve the Merger Proposal. The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote on the matter is required to approve each of the Compensation Proposal and the Adjournment Proposal.

If you abstain from voting, fail to vote at the special meeting, or fail to instruct your broker, bank or other nominee how to vote on the Merger Proposal, it will have the same effect as a vote cast against the Merger Proposal.

If you abstain from voting or attend the special meeting and fail to vote, it will have the same effect as a vote cast against the Compensation Proposal and the Adjournment Proposal. If you do not attend the special meeting or fail to instruct your broker, bank or other nominee how to vote on the Compensation Proposal and the Adjournment Proposal, it will have no effect on the outcome of the vote on the Compensation Proposal and the Adjournment Proposal, assuming a quorum is present.

The Merger

Summary of the Merger (see page 53)

Subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Atmel, and Atmel will continue as the surviving corporation in the Merger and an indirect wholly owned subsidiary of Microchip. At the Effective Time, Atmel’s restated certificate of incorporation will be amended and restated in the form prescribed in the Merger Agreement and will be the certificate of incorporation of the surviving corporation from and after the Effective Time.

Recommendation of the Atmel Board; Atmel’s Reasons for the Merger (see page 71)

The Atmel Board recommends that Atmel stockholders vote “FOR” the Merger Proposal, “FOR” the Compensation Proposal, and “FOR” the Adjournment Proposal. For more information regarding the factors considered by the Atmel Board in reaching its decision to approve the Merger Agreement, the Merger and the

 



 

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other transactions contemplated by the Merger Agreement, see the section entitled “The Merger—Recommendation of the Atmel Board; Atmel’s Reasons for the Merger” beginning on page 71 of this proxy statement/prospectus.

Opinion of Atmel’s Financial Advisor (see page 78 and Annex B)

Atmel retained Qatalyst Partners LP (“Qatalyst Partners”) to act as its financial advisor in connection with the Merger. Atmel selected Qatalyst Partners to act as its financial advisor based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of Atmel’s business and affairs and the industry in which it operates. At the meeting of the Atmel Board on January 19, 2016, Qatalyst Partners rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated January 19, 2016, that as of January 19, 2016 and based upon and subject to the considerations, limitations and other matters set forth therein, the Merger Consideration to be received by the holders of Atmel common stock, other than Atmel, Microchip or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of the written opinion of Qatalyst Partners, dated January 19, 2016, is attached to this proxy statement/prospectus as Annex B and is incorporated into this proxy statement/prospectus by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the Atmel Board and addressed only, as of the date of the opinion, the fairness from a financial point of view of the Merger Consideration to be received by the holders of Atmel common stock, other than Atmel, Microchip or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement. It does not address any other aspect of the Merger and does not constitute a recommendation as to how any holder of shares of Atmel common stock should vote with respect to the Merger or any other matter. For a further discussion of Qatalyst Partners’ opinion, see the section entitled “The Merger—Opinion of Atmel’s Financial Advisor” beginning on page 78 of this proxy statement/prospectus.

Share Ownership and Voting by Atmel Directors and Executive Officers (see page 45)

As of the Record Date, the directors and executive officers of Atmel held and are entitled to vote, in the aggregate, approximately [●]% of the aggregate voting power of the outstanding shares of Atmel’s common stock.

Listing of Shares of Microchip Common Stock; Delisting and Deregistration of Shares of Atmel Common Stock (see pages 94, 95)

Microchip is obligated to cause the shares of Microchip common stock to be issued to Atmel stockholders pursuant to the Merger to be authorized for listing on NASDAQ at the Effective Time, subject to official notice of issuance. Upon completion of the Merger, shares of Atmel common stock will cease to be listed on NASDAQ and will subsequently be deregistered under the Exchange Act.

See the sections entitled “The Merger—Listing of Shares of Microchip Common Stock” beginning on page 94 of this proxy statement/prospectus and “The Merger—Delisting and Deregistration of Atmel Common Stock” beginning on page 95 of this proxy statement/prospectus for a further discussion of the listing of shares of Microchip common stock and de-listing of Atmel common stock in connection with the Merger.

 



 

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The Merger Agreement (see page 99)

The Merger Agreement is attached as Annex A to this proxy statement/prospectus. Microchip and Atmel encourage you to read the entire Merger Agreement carefully because it is the principal document governing the Merger and the issuance of shares of Microchip common stock.

Merger Consideration (see page 99)

Subject to the terms and conditions of the Merger Agreement, at the Effective Time, each share of Atmel common stock that is issued and outstanding immediately prior to the consummation of the Merger (except for Atmel common stock held by Microchip, Atmel and their respective subsidiaries and except for dissenting shares) will be converted into the right to receive (1) $7.00 in cash without interest, (2) $1.15 in Microchip common stock (valued at the ten-trading day average closing price ending on the last trading day prior to the Closing), subject to the conditions and restrictions set forth in the Merger Agreement, and (3) cash in lieu of fractional shares of Microchip common stock as contemplated by the Merger Agreement. The maximum number of shares of Microchip common stock that will be issued in connection with the Merger is 13.0 million shares, and to the extent that the number of shares of Microchip common stock issuable in the Merger would exceed 13.0 million shares, the Cash Consideration per share of Atmel common stock will be increased such that the value of the combined Cash Consideration and Stock Consideration will remain at $8.15 per share (based upon the average price described in the previous sentence). See the section entitled “The Merger Agreement—Merger Consideration” beginning on page 99 of this proxy/statement prospectus for more information.

Based on the number of shares of Atmel common stock outstanding as of January 31, 2016, and the number of shares of Microchip common stock outstanding as of January 31, 2016, and assuming a ten-trading day average closing price of $43.17 (calculated based on the closing prices for the ten trading days ended on February 8, 2016, the most recent practicable range of trading days prior to the date of this proxy statement/prospectus), it is expected that, immediately after completion of the Merger, former Atmel stockholders will receive shares of Microchip common stock in the Merger representing approximately 5.23% of the outstanding shares of Microchip common stock.

Treatment of Atmel Options and Other Equity-Based Awards (see page 100)

Immediately prior to the Effective Time, each outstanding Atmel Option, whether vested or not, will accelerate and become vested and exercisable in full. To the extent that an Atmel Option is not exercised voluntarily through the day immediately preceding the Effective Time, such Atmel Option will be automatically “net-exercised” immediately prior to the Effective Time (with the exercise price and applicable withholding taxes paid by withholding Atmel common stock otherwise issuable to such optionholder). Upon such exercise, the former holder of the Atmel Option will be issued the net number of shares of Atmel common stock resulting from the “net exercise,” and such stockholder will thereafter be entitled to receive the Merger Consideration in respect of these shares of Atmel common stock. Any Atmel option with an exercise price greater than the Merger Consideration will be cancelled at the Effective Time for no consideration. No former Atmel Options will remain outstanding following the consummation of the Merger.

Immediately prior to the Effective Time, each unvested and outstanding Atmel Unit (including each “performance share award” denominated in restricted stock units) that is held by an individual who will continue in service with Microchip at the Effective Time will be assumed by Microchip and converted into equivalent awards in respect of shares of Microchip common stock using a customary exchange ratio intended to provide in respect of the Atmel Unit value equivalent to the Merger Consideration as of the Effective Time. In addition, any vested Atmel Unit will be treated as outstanding Atmel common stock in the Merger, and each holder of such vested Atmel Unit who has not received the underlying shares of Atmel common stock at the Effective Time will receive the Merger Consideration (subject to applicable tax withholding). No Atmel Units will remain outstanding following the consummation of the Merger.

 



 

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Closing and Effective Time (see page 100)

Microchip and Atmel expect the Closing to occur in the second quarter of calendar year 2016. However, the Merger is subject to various regulatory approvals and the satisfaction or waiver of other conditions, and it is possible that factors outside the control of Microchip and Atmel could result in the Merger being completed at an earlier time, a later time or not at all. In the Merger Agreement, Microchip and Atmel have agreed that the Closing Date shall be no later than the second business day following the satisfaction or waiver of the last of the conditions to Closing to be satisfied (other than those conditions that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of those conditions), or at such other date and time as Atmel and Microchip agree in writing; provided, however, if the Closing Date would otherwise occur within the last 15 days of a calendar quarter, Microchip may elect once, in its sole discretion, by written notice to Atmel to defer the Closing to the first business day occurring immediately after the end of that calendar quarter. There may be a substantial amount of time between the dates on which the special meeting is held and the date on which the Merger is completed.

Appraisal Rights (see page 102)

Record holders of Atmel common stock who do not vote in favor of the Merger Proposal and who otherwise comply with the requirements and procedures of Section 262 of the DGCL are entitled to exercise appraisal rights, which generally entitle stockholders to receive in lieu of the Merger Consideration a cash payment of an amount determined by the Court of Chancery equal to the fair value of their Atmel common stock. A summary description of the appraisal rights available to holders of Atmel common stock under the DGCL and the procedures required to exercise statutory appraisal rights are included under the section entitled “The Merger—Appraisal Rights” beginning on page 95 of this proxy statement/prospectus. The full text of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus. Due to the complexity of the procedures described above, Atmel stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel.

Restrictions on Atmel’s Business Pending the Closing (see page 106)

Atmel has agreed, subject to certain exceptions set forth in the Merger Agreement, on behalf of itself and its subsidiaries that it will conduct its business in the ordinary course of business prior to the Effective Time or earlier termination of the Merger Agreement, and has agreed to certain restrictions on its ability to take certain actions prior to the Effective Time or earlier termination of the Merger Agreement. See the section entitled “The Merger Agreement—Restrictions on Atmel’s Business Pending the Closing” beginning on page 106 of this proxy statement/prospectus for more information.

Atmel’s Agreement Not to Solicit Other Offers (see page 108)

Atmel has agreed that it will not, directly or indirectly:

 

    initiate, solicit or knowingly encourage the making of any proposal or offer that constitutes, or would reasonably be expected to result in, an Atmel Acquisition Proposal (as described in the section entitled “The Merger Agreement—Atmel’s Agreement Not to Solicit Other Offers” beginning on page 108 of this proxy statement/prospectus);

 

    engage in, enter into, continue or otherwise participate in any discussions or negotiations with any person with respect to, or provide any non-public information or data concerning Atmel or its subsidiaries to any person relating to, any proposal or offer that constitutes, or would reasonably be expected to result in, an Atmel Acquisition Proposal;

 



 

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    enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle or any other agreement (other than a confidentiality agreement having terms that the Atmel Board determines in good faith are not materially less favorable in the aggregate to Atmel than those contained in its confidentiality agreement with Microchip) relating to an Atmel Acquisition Proposal; or

 

    authorize, adopt, approve or recommend or publicly propose to authorize, adopt, approve or recommend to the Atmel stockholders, or submit to the Atmel stockholders for a vote at any stockholder meeting, any Atmel Acquisition Proposal.

Atmel has agreed to (1) cease any discussions or negotiations with any person with respect to any Atmel Acquisition Proposal, (2) promptly notify Microchip after knowledge of receipt of any Atmel Acquisition Proposal or any request for information from, or any negotiations sought to be initiated or resumed with respect to an Atmel Acquisition Proposal, and (3) keep Microchip reasonably informed on a prompt basis of any material developments regarding any Atmel Acquisition Proposal.

However, until receipt of the Atmel Stockholder Approval, if Atmel receives a bona fide Atmel Acquisition Proposal from any person that did not result from a material breach of its non-solicitation obligations, Atmel may:

 

    provide information (including non-public information and data) regarding, and afford access to the business, properties, assets, books, records and personnel of, Atmel and its subsidiaries to such person if Atmel receives from such person (or has received from such person) an executed confidentiality agreement having terms that the Atmel Board determines in good faith are not materially less favorable in the aggregate to Atmel than those contained in its confidentiality agreement with Microchip, provided that Atmel will promptly make available to Microchip any non-public information concerning Atmel or its subsidiaries that is provided to any person given such access that was not previously made available to Microchip; and

 

    engage in, enter into, continue or otherwise participate in any discussions or negotiations with such person with respect to such Atmel Acquisition Proposal,

as long as (1) Atmel has not materially breached its non-solicitation obligations with respect to such Atmel Acquisition Proposal and (2) prior to taking any action described above, the Atmel Board determines in good faith that (a) such Atmel Acquisition Proposal either constitutes an Atmel Superior Proposal (as described in the section entitled “The Merger Agreement—Atmel’s Agreement Not to Solicit Other Offers” beginning on page 108 of this proxy statement/prospectus) or would reasonably be expected to result in an Atmel Superior Proposal and (b) the failure to participate in such discussions or negotiations or furnish such information would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law.

See the section entitled “The Merger Agreement—Atmel’s Agreement Not to Solicit Other Offers” beginning on page 108 of this proxy statement/prospectus for more information.

Atmel’s Agreement Not to Change the Atmel Board Recommendation (see page 110)

Atmel has agreed that the Atmel Board will only change its recommendation to the Atmel stockholders that they adopt the Merger Agreement (the “Atmel Board Recommendation”) in certain, limited circumstances.

Atmel has agreed that the Atmel Board will not:

 

    change, withhold, withdraw, qualify or modify, in a manner adverse to Microchip (or publicly propose or resolve to change, withhold, withdraw, qualify or modify), the Atmel Board Recommendation;

 



 

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    fail to include in this proxy statement/prospectus (1) the determination of the Atmel Board that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and are fair to and in the best interests of Atmel and the Atmel stockholders, (2) the approval of the Atmel Board of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and (3) the recommendation of the Atmel Board to the Atmel stockholders that the Atmel stockholders adopt the Merger Agreement;

 

    publicly approve or recommend, or publicly propose to approve or recommend to the Atmel stockholders, an Atmel Acquisition Proposal;

 

    fail to recommend against acceptance of any tender offer or exchange offer that constitutes an Atmel Acquisition Proposal by the Atmel stockholders or against another Atmel Acquisition Proposal that is otherwise publicly announced within ten business days after commencement or announcement thereof; or

 

    authorize, adopt, approve or publicly propose to authorize, adopt or approve or recommend, or enter into, any agreement constituting or relating to an Atmel Acquisition Proposal or requiring Atmel to abandon, terminate, or fail to consummate the Merger or any other transaction contemplated by the Merger Agreement.

Any of the actions in the first four bullets above is referred to as an “Atmel Change of Recommendation.”

The Atmel Board may make an Atmel Change of Recommendation (so long as Atmel has provided prior written notice to Microchip of its or the Atmel Board’s intention to make an Atmel Change of Recommendation at least four business days in advance of taking such action) as follows:

 

    other than in relation to an Atmel Acquisition Proposal, if the Atmel Board determines in good faith (after consultation with its outside legal counsel) that, as a result of an event, development or change in circumstances that occurs or arises after the execution and delivery of the Merger Agreement (other than an Atmel Acquisition Proposal) that was not known (or the consequences of which were not known) to the Atmel Board prior to the execution and delivery of the Merger Agreement, the failure to make an Atmel Change of Recommendation would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law, and the Atmel Board has considered in good faith any changes to the Merger Agreement or other arrangements that may be offered in writing by, and would be legally binding upon, Microchip and shall have determined in good faith, after consultation with outside counsel, that it would continue to reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law not to make an Atmel Change of Recommendation, even if such changes were given effect; and

 

    if Atmel receives an Atmel Acquisition Proposal and the Atmel Board determines in good faith (after consultation with outside counsel and its financial advisors) that the Atmel Acquisition Proposal constitutes an Atmel Superior Proposal and that the failure to make an Atmel Change of Recommendation would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law, but only if Atmel has not materially breached its non-solicitation obligations with respect to such Atmel Acquisition Proposal and terminates the Merger Agreement concurrently with entering into any agreement relating to an Atmel Acquisition Proposal and pays a termination fee as described below, and the Atmel Board has considered in good faith any changes to the Merger Agreement or other arrangements that may be offered in writing by, and would be legally binding upon, Microchip and shall have determined in good faith, after consultation with outside counsel and its financial advisors, that the Atmel Acquisition Proposal received by Atmel continues to constitute an Atmel Superior Proposal, even if such changes were given effect.

See the section entitled “The Merger Agreement—Atmel’s Agreement Not to Change the Atmel Board Recommendation” beginning on page 110 of this proxy statement/prospectus for more information.

 



 

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Regulatory Filings (see page 114)

Microchip and Atmel have each agreed to take certain actions in order to obtain regulatory clearances required to consummate the Merger. The Merger is subject to review by the U.S. Federal Trade Commission (the “FTC”). The Merger is also subject to review by German and South Korean governmental authorities and requires pre-merger notification and the observance of an applicable waiting period in Germany (“German Antitrust Law”) and South Korea (“South Korean Antitrust Law”). See the section entitled “The Merger Agreement—Regulatory Filings” beginning on page 114 of this proxy statement/prospectus for more information.

Financing (see page 114)

Microchip currently anticipates that it will finance the Cash Consideration through a combination of cash on hand and available borrowings under its existing credit facility, and does not currently anticipate raising additional financing in connection with the Merger. To the extent that Microchip determines to obtain additional financing prior to the Effective Time, Atmel has agreed to use reasonable best efforts to cooperate with Microchip in connection with any such financing. The Closing is not, however, subject to a financing condition or to Microchip’s ability to obtain any financing from third party sources. See the section entitled “The Merger Agreement—Financing” beginning on page 114 of this proxy statement/prospectus for more information.

Conditions to Completion of the Merger (see page 117)

Under the Merger Agreement, each party’s obligation to effect the Merger is subject to satisfaction or, to the extent permitted by applicable law, mutual waiver at the Effective Time of each of the following conditions:

 

    the Atmel Stockholder Approval shall have been obtained;

 

    (1) no governmental entity having competent jurisdiction shall have enacted, issued or entered any order that remains in effect that enjoins or otherwise prohibits the Merger substantially on the terms contemplated by the Merger Agreement, (2) no law shall have been enacted or promulgated by any governmental entity having competent jurisdiction that makes consummation of the Merger illegal, and (3) no governmental entity having competent jurisdiction shall have instituted any proceeding seeking any such laws and orders;

 

    the Form S-4 of which this proxy statement/prospectus is a part shall have become effective under the Securities Act and the Form S-4 will not be the subject of any stop order or proceedings seeking a stop order, and the SEC shall not have initiated or threatened any proceeding for that purpose or any similar proceeding in respect of this proxy statement/prospectus;

 

    any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and the consents or approvals from the German Bundeskartellamt and the South Korean Fair Trade Commission shall have been obtained; and

 

    the shares of Microchip common stock issuable to the Atmel stockholders as contemplated by the Merger Agreement shall have been approved for listing on NASDAQ, subject to official notice of issuance.

Microchip’s and Merger Sub’s obligation to effect the Merger is further subject to the satisfaction or waiver of the following conditions:

 

   

Atmel’s fundamental representations and warranties, (1) if qualified or limited by materiality or Material Adverse Effect (as described below) qualifications, will be true and correct as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date) and (2) if not qualified or limited by materiality or Material Adverse Effect qualifications, will be true and correct in all material respects as

 



 

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of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date);

 

    the representations and warranties of Atmel relating to capital structure will be true and correct in all but de minimis respects as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all but de minimis respects as of such earlier date);

 

    the representations and warranties of Atmel (other than with respect to Atmel’s fundamental representations and warranties and the representations and warranties relating to its capital structure) will be true and correct (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect set forth therein, except as otherwise provided in the representations and warranties of Atmel with respect to the absence of certain changes and material contracts) as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to Atmel;

 

    Atmel shall have performed in all material respects the covenants required to be performed by it under the Merger Agreement at or prior to the Closing Date;

 

    Microchip shall have received a certificate signed on behalf of Atmel by a senior executive of Atmel and dated as of the Closing Date to the effect that the conditions related to Atmel’s representations, warranties and covenants described above have been satisfied; and

 

    since January 19, 2016, a Material Adverse Effect with respect to Atmel shall not have occurred.

Atmel’s obligation to effect the Merger is further subject to the satisfaction or waiver of the following conditions:

 

    Microchip’s fundamental representations and warranties, (1) if qualified or limited by materiality or Material Adverse Effect qualifications, will be true and correct as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date) and (2) if not qualified or limited by materiality or Material Adverse Effect qualifications, will be true and correct in all material respects as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date);

 

    the representations and warranties of Microchip and Merger Sub (other than with respect to Microchip’s fundamental representations) will be true and correct (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect set forth therein, except as otherwise provided in the representations and warranties of Microchip and Merger Sub with respect to the absence of certain changes and material contracts) as of January 19, 2016 and at and as of the Closing Date as though made on or as of such date (except to the extent that any such representation and warranty speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to Microchip;

 



 

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    each of Microchip and Merger Sub shall have performed in all material respects their respective covenants required to be performed by each under the Merger Agreement at or prior to the Closing Date;

 

    Atmel shall have received a certificate signed on behalf of each of Microchip and Merger Sub by a senior executive of Microchip and Merger Sub, respectively, and dated as of the Closing Date to the effect that the conditions related to Microchip’s and Merger Sub’s representations, warranties and covenants described above have been satisfied; and

 

    since January 19, 2016, a Material Adverse Effect with respect to Microchip shall not have occurred.

The Merger Agreement provides that neither party may rely on the failure of any condition to Closing to be satisfied if such failure was caused by that party’s failure to comply with its obligations under the Merger Agreement.

Any or all of the conditions described above other than the Atmel Stockholder Approval may be waived, in whole or in part, by Microchip or Atmel, to the extent permitted by applicable law.

See the section entitled “The Merger Agreement—Conditions to Closing” beginning on page 117 of this proxy statements/prospectus for more information.

Termination of the Merger Agreement (see page 119)

The Merger Agreement may be terminated at any time prior to the Effective Time by mutual written consent of Microchip and Atmel, and either party may terminate the Merger Agreement in the following circumstances:

 

    if prior to the Effective Time, the Merger is enjoined, prohibited or otherwise restrained by the terms of a final, non-appealable order of a governmental entity of competent jurisdiction, except that the right to terminate the Merger Agreement on this basis will not be available to any party whose breach of any provision of the Merger Agreement results in or causes such order to be issued or the failure of the order to be removed;

 

    if the Merger has not been consummated on or before July 17, 2016 (the “Initial Outside Date”), which will be automatically extended to October 15, 2016 if the Closing is delayed due to certain conditions to Closing relating to antitrust laws not being satisfied, or such later date as Microchip and Atmel agree upon in writing (the “Outside Date”), except that the right to terminate the Merger Agreement on this basis will not be available to any party whose breach of any provision of the Merger Agreement results in or causes the failure of the Merger to be consummated by such date; or

 

    if the special meeting (including any adjournment or postponement thereof in accordance with the terms of the Merger Agreement) has concluded, the Atmel stockholders have voted, and the Atmel Stockholder Approval was not obtained.

Atmel may also terminate the Merger Agreement at any time prior to the Effective Time as follows:

 

    in order for Atmel to concurrently enter into an agreement for an Atmel Superior Proposal, provided that Atmel has complied in all material respects with its obligations relating to an Atmel Change of Recommendation and Atmel pays to Microchip substantially concurrently with such termination the termination fee described below; or

 

   

if Microchip or Merger Sub breaches any representation, warranty or covenant made by Microchip or Merger Sub in the Merger Agreement and such breach (1) is not curable by the Outside Date or, if curable, is not cured prior to the 45th day after written notice thereof is given by Atmel to Microchip

 



 

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and (2) would result in the conditions to Closing related to Microchip’s representations, warranties or covenants failing to be satisfied; provided that Atmel is not then in breach of the Merger Agreement such that the conditions to Closing related to Atmel’s representations, warranties or covenants would not be capable of being satisfied by the Outside Date.

Microchip may also terminate the Merger Agreement at any time prior to the Effective Time as follows:

 

    if Atmel breaches any representation, warranty or covenant made by Atmel in the Merger Agreement (other than its obligations described above under “The Merger Agreement––Atmel’s Agreement Not to Solicit Other Offers”) and such breach (1) is not curable by the Outside Date or, if curable, is not cured prior to the 45th day after written notice thereof is given by Microchip to Atmel and (2) would result in the conditions to Closing related to Atmel’s representations, warranties or covenants failing to be satisfied; provided that Microchip is not then in breach of the Merger Agreement such that the conditions to Closing related to Microchip’s representations, warranties or covenants would not be capable of being satisfied by the Outside Date;

 

    if the Atmel Board makes an Atmel Change of Recommendation; or

 

    if Atmel willfully or intentionally breaches any of its non-solicitation obligations in any material respect.

See the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 119 of this proxy statement/prospectus for more information.

Termination Fees (see page 120)

In certain circumstances, Atmel may be required to pay a termination fee of $137.3 million in cash to Microchip if the Merger Agreement is terminated. Additionally, in the event that either Microchip or Atmel terminates the Merger Agreement as a result of the failure by Atmel’s stockholders to approve the Merger, Atmel must reimburse Microchip for reasonable out-of-pocket costs incurred in connection with the Merger up to $20.0 million with any such reimbursement offsetting any termination fee payable by Atmel. In certain circumstances, Microchip may be required to pay a termination fee of $250.0 million in cash to Atmel if the Merger Agreement is terminated. See the section entitled “The Merger Agreement—Termination Fees” beginning on page 120 of this proxy statement/prospectus for more information.

Dividends (see page 102)

Under the terms of the Merger Agreement, Atmel is prohibited from paying dividends on its common stock during the pendency of the Merger.

Material U.S. Federal Income Tax Consequences (see page 123)

The Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. Holder (as defined in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 123 of this proxy statement/prospectus) of shares of Atmel common stock generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference between (1) the sum of the amount of cash and the fair market value of the shares of Microchip common stock received and (2) the holder’s tax basis in the shares of Atmel common stock exchanged in the Merger.

Any such gain or loss generally will be capital gain or loss and generally will be long-term capital gain or loss if the U.S. Holder’s holding period in the Atmel common stock immediately prior to the Merger is more than one

 



 

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year. For U.S. Holders that are individuals, estates or trusts, long-term capital gain generally is taxed at preferential U.S. federal rates. The deductibility of capital losses is subject to limitations.

A U.S. Holder will have a tax basis in the shares of Microchip common stock received in the Merger equal to the fair market value of such shares. The holding period for shares of Microchip common stock received in exchange for shares of Atmel common stock in the Merger will begin on the date immediately following the Effective Time.

A Non-U.S. Holder (as defined in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 123 of this proxy statement/prospectus) generally will not be subject to U.S. federal income tax with respect to the exchange of shares of Atmel common stock for cash and shares of Microchip common stock in the Merger unless such Non-U.S. Holder has certain connections to the United States.

The U.S. federal income tax consequences described above may not apply to all holders of Atmel common stock, including certain holders specifically referred to on page 123. Your tax consequences will depend on your own situation. You should consult your tax advisor to determine the particular tax consequences of the Merger to you.

Accounting Treatment (see page 126)

Each of Microchip and Atmel prepares its financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Merger will be accounted for using the acquisition method of accounting with Microchip treated as the acquiror of Atmel for accounting purposes.

Comparison of Stockholders’ Rights (see page 129)

Atmel stockholders, whose rights are currently governed by the restated certificate of incorporation of Atmel (the “Atmel Charter”) and the amended and restated bylaws of Atmel (as amended, the “Atmel Bylaws”) will, to the extent such holders receive Microchip common stock in the Merger, upon completion of the Merger, become stockholders of Microchip and their rights will be governed by the restated certificate of incorporation of Microchip (the “Microchip Charter”) and the amended and restated bylaws of Microchip (the “Microchip Bylaws”). The differences between the Atmel governing documents and the Microchip governing documents are described in detail under the section entitled “Comparison of Stockholders’ Rights” beginning on page 129 of this proxy statement/prospectus.

 



 

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Table of Contents

THE COMPANIES

Microchip Technology Incorporated

Microchip is a leading provider of microcontroller, mixed-signal, analog and Flash-IP solutions, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Microchip develops, manufactures and sells specialized semiconductor products used by its customers for a wide variety of embedded control applications. Microchip’s product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety, security, wired connectivity and wireless connectivity devices, as well as serial EEPROMs, Serial Flash memories, Parallel Flash memories and serial SRAM memories. Microchip also licenses Flash-IP solutions that are incorporated in a broad range of products. Microchip’s synergistic product portfolio targets thousands of applications worldwide and a growing demand for high-performance designs in the automotive, communications, computing, consumer and industrial control markets. Microchip’s quality systems are ISO/TS16949 (2009 version) certified.

Shares of Microchip common stock are traded on NASDAQ under the symbol “MCHP.” Following the Merger, shares of Microchip common stock will continue to be traded on NASDAQ under the symbol “MCHP.”

The principal executive offices of Microchip are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224, and its telephone number is (480) 792-7200. Additional information about Microchip and its subsidiaries is included in documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

Atmel Corporation

Atmel is one of the world’s leading suppliers of general purpose microcontrollers, which are self-contained computers-on-a-chip. This product focus has enabled Atmel to develop and maintain a diversified, global customer base that incorporates its semiconductors into industrial products, automotive systems, digital consumer products, mobile computing devices, communications networks, and other electronics in which its products provide embedded processing and critical interface functions.

The principal executive offices of Atmel are located at 1600 Technology Drive, San Jose, California 95110, and its telephone number is (408) 441-0311. Additional information about Atmel is included in documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

Hero Acquisition Corporation

Hero Acquisition Corporation, or “Merger Sub,” is an indirect wholly owned subsidiary of Microchip and is a Delaware corporation. Merger Sub was formed on December 22, 2015, for the sole purpose of effecting the Merger. In the Merger, Merger Sub will be merged with and into Atmel, with Atmel surviving as an indirect wholly owned subsidiary of Microchip.

The principal executive offices of Merger Sub are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224, and its telephone number is (480) 792-7200.

 

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Table of Contents

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MICROCHIP

The following tables present selected historical consolidated financial data of Microchip as of and for the years ended March 31, 2015, 2014, 2013, 2012 and 2011 and as of and for the nine-month periods ended December 31, 2015 and 2014. The consolidated financial statements of Microchip have been presented in accordance with U.S. GAAP.

The selected consolidated financial data as of March 31, 2015, 2014 and 2013 and for each of the years in the three-year period ended March 31, 2015 are derived from Microchip’s audited consolidated financial statements incorporated by reference into this proxy statement/prospectus. The selected consolidated financial data as of March 31, 2012 and 2011 and for each of the years in the two-year period ended March 31, 2012 are derived from Microchip’s audited consolidated financial statements not included or incorporated by reference herein.

The selected consolidated financial data of Microchip as of and for the nine-month periods ended December 31, 2015 and 2014 have been derived from the unaudited consolidated interim financial information incorporated by reference into this proxy statement/prospectus, which, in the opinion of Microchip’s management, includes all adjustments necessary to present fairly Microchip’s results of operations and financial condition at the dates and for the periods presented. The results for the nine-month period ended December 31, 2015 are not necessarily indicative of the results of operations that you should expect for the entire year ended March 31, 2016, or any other period.

The financial information set forth below is only a summary that should be read in conjunction with the section entitled “Risk Factors” beginning on page 32 of this proxy statement/prospectus and Microchip’s consolidated financial statements, including the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Microchip’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and the Quarterly Reports on Form 10-Q for the periods ended June 30, 2015, September 30, 2015 and December 31, 2015 that Microchip previously filed with the SEC and that are incorporated by reference into this proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. See also the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus for the location of information incorporated by reference in this proxy statement/prospectus.

 

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Table of Contents
    Nine Months Ended
December 31,
    Year ended March 31,  
    2015     2014     2015     2014     2013     2012     2011  
    (in thousands, except per share amounts)  

Net sales

  $ 1,615,687      $ 1,603,829      $ 2,147,036      $ 1,931,217      $ 1,581,623      $ 1,383,176      $ 1,487,205   

Cost of sales (1)

    713,002        687,897        917,472        802,474        743,164        583,882        605,954   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    902,685        915,932        1,229,564        1,128,743        838,459        799,294        881,251   

Operating expenses:

             

Research and development (1)

    276,958        261,881        349,543        305,043        254,723        182,650        170,607   

Selling, general and administrative (1)

    223,377        207,037        274,815        267,278        261,471        208,328        222,184   

Amortization of acquired intangible assets

    126,764        129,659        176,746        94,534        111,537        10,963        12,412   

Special charges

    3,187        2,082        2,840        3,024        32,175        837        1,865   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    630,286        600,659        803,944        669,879        659,906        402,778        407,068   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    272,399        315,273        425,620        458,864        178,553        396,516        474,183   

(Losses) gains on equity method investments

    (289     (129     (317     (177     (617     (195     157   

Other income (expense):

             

Interest income

    18,610        14,197        19,527        16,485        15,560        17,992        16,002   

Interest expense

    (77,203     (41,920     (62,034     (48,716     (40,915     (34,266     (31,521

Loss on retirement of convertible debentures

    —          —          (50,631     —          —          —          —     

Other income (expense), net

    10,163        (3,535     13,742        5,898        (404     (352     1,877   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

    223,680        283,886        345,907        432,354        152,177        379,695        460,698   

Income tax (benefit) provision

    (32,890     17,141        (19,418     37,073        24,788        42,990        31,531   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

    256,570        266,745        365,325        395,281        127,389        336,705        429,167   

Less: Net loss attributable to noncontrolling interests

    207        2,862        3,684        —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations attributable to Microchip Technology

  $ 256,777      $ 269,607      $ 369,009      $ 395,281      $ 127,389      $ 336,705      $ 429,167   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income per common share from continuing operations attributable to Microchip Technology stockholders

  $ 1.26      $ 1.34      $ 1.84      $ 1.99      $ 0.65      $ 1.76      $ 2.29   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income per common share from continuing operations attributable to Microchip Technology stockholders

  $ 1.18      $ 1.20      $ 1.65      $ 1.82      $ 0.62      $ 1.65      $ 2.20   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends declared per common share

  $ 1.0740      $ 1.0680      $ 1.425      $ 1.417      $ 1.406      $ 1.390      $ 1.374   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic common shares outstanding

    203,267        200,673        200,937        198,291        194,595        191,283        187,066   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted common shares outstanding

    217,280        224,433        223,561        217,630        205,776        203,519        194,715   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1) Includes share-based compensation expense as follows:

             

Cost of sales

  $ 6,325      $ 6,985      $ 9,010      $ 7,340      $ 8,234      $ 5,648      $ 6,825   

Research and development

    23,623        20,645        28,164        24,554        22,178        14,719        12,874   

Selling, general and administrative

    24,155        15,783        21,422        21,893        27,603        17,922        17,113   

 

    As of December 31,     As of March 31,  
    2015     2014     2015     2014     2013     2012     2011  
    (in thousands)  

Balance Sheet Data:

             

Cash and cash equivalents

  $ 331,451      $ 456,339      $ 607,815      $ 466,603      $ 528,334      $ 635,755      $ 703,924   

Cash and cash equivalents and short-term investments

    1,007,900        1,122,458        1,958,869        1,344,785        1,578,597        1,459,009        1,243,496   

Fixed assets, net

    622,842        577,123        581,572        531,967        514,544        516,611        540,513   

Total assets

    5,446,553        4,628,917        4,780,713        4,067,630        3,851,405        3,083,776        2,968,058   

Long-term debt and capital lease obligations, less current portion

    2,419,057        1,337,876        1,839,975        999,436        983,385        355,050        327,949   

Stockholders’ equity

    2,126,344        2,256,289        2,061,026        2,135,461        1,933,470        1,990,673        1,812,438   

 

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Table of Contents

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATMEL

The following tables present selected historical consolidated financial data of Atmel as of and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 and as of September 30, 2015 and for the nine-month periods ended September 30, 2015 and 2014. The consolidated financial statements of Atmel have been presented in accordance with U.S. GAAP.

The selected consolidated financial data as of December 31, 2014 and 2013 and for each of the years in the three-year period ended December 31, 2014 are derived from Atmel’s audited consolidated financial statements incorporated by reference into this proxy statement/prospectus. The selected consolidated financial data as of December 31, 2012, 2011 and 2010 and for each of the years in the two-year period ended December 31, 2011 are derived from Atmel’s audited consolidated financial statements not included or incorporated by reference herein.

The selected consolidated financial data of Atmel as of September 30, 2015 and for the nine-month periods ended September 30, 2015 and 2014 have been derived from the unaudited consolidated interim financial information incorporated by reference into this proxy statement/prospectus, which in the opinion of Atmel’s management, includes all adjustments necessary to present fairly Atmel’s results of operations and financial condition at the dates and for the periods presented. The results for the nine-month period ended September 30, 2015 are not necessarily indicative of the results of operations that you should expect for the entire year ended December 31, 2015, or any other period.

The financial information set forth below is only a summary that should be read in conjunction with the section entitled “Risk Factors” beginning on page 32 of this proxy statement/prospectus and Atmel’s consolidated financial statements, including the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Atmel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and the Quarterly Reports on Form 10-Q for the periods ended March 31, 2015, June 30, 2015 and September 30, 2015 that Atmel previously filed with the SEC and that are incorporated by reference into this proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. See also the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus for the location of information incorporated by reference in this proxy statement/prospectus.

 

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Table of Contents
    Nine Months Ended
September 30,
    Year Ended December 31,  
    2015     2014     2014     2013     2012     2011     2010  
    (in thousands, except per share data and footnotes)  

Income Statement Data:

       

Net revenue

  $ 911,174      $ 1,067,380      $ 1,413,334      $ 1,386,447      $ 1,432,110      $ 1,803,053      $ 1,644,060   

Cost of revenue

    489,207        589,309        794,704        812,822        830,791        894,820        915,876   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations before income taxes (1)(3)(4)

    50,694        58,958        57,226        (513     42,238        381,190        116,352   

Net income (loss)

    22,168        38,652        35,208        (22,055     30,445        314,990        423,075   

Less: net loss (income) attributable to noncontrolling interest, net of taxes

    25        —          (3,013     —          —          —          —     

Net income (loss) attributable to Atmel

    22,193        38,652        32,195        (22,055     30,445        314,990        423,075   

Basic net income (loss) per share attributable to Atmel

             

Net income (loss) per share

  $ 0.05      $ 0.09      $ 0.08      $ (0.05   $ 0.07      $ 0.69      $ 0.92   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in basic net income (loss) per share calculation

    418,072        421,791        419,103        427,460        433,017        455,629        458,482   

Diluted net income (loss) per share attributable to Atmel

             

Net income (loss) per share

  $ 0.05      $ 0.09      $ 0.08      $ (0.05   $ 0.07      $ 0.68      $ 0.90   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in diluted net income (loss) per share calculation

    419,482        423,700        420,910        427,460        437,582        462,673        469,580   

 

     As of
September 30,
     As of December 31,  
     2015      2014      2013      2012      2011      2010  
     (in thousands)  

Balance Sheet Data:

                 

Cash and cash equivalents

   $ 218,741       $ 206,937       $ 276,881       $ 293,370       $ 329,431       $ 501,455   

Cash and cash equivalents and short-term investments

     218,741         206,937         279,062         296,057         332,510         521,029   

Fixed assets, net (2)

     139,780         158,281         184,983         221,044         257,070         260,124   

Total assets

     1,300,898         1,362,304         1,352,526         1,433,533         1,526,598         1,650,042   

Long-term debt and capital lease obligations, less current portion

     55,000         75,002         7,010         5,602         4,599         3,976   

Stockholders’ equity

     861,307         869,999         937,927         996,638         1,082,444         1,053,056   

 

(1) Atmel recorded a loss on sale of assets of $99.8 million for the year ended December 31, 2010 related to the sale of its manufacturing operations in Rousset, France and the sale of its Secure Microcontroller Solutions business. Atmel recorded an income tax benefit related to release of valuation allowances of $116.7 million related to certain deferred tax assets, and recorded an additional benefit to income tax expense of approximately $151.2 million related to the release of previously accrued penalties and interest on the income tax exposures and a refund from the carryback of tax attributes for the year ended December 31, 2010.
(2) Fixed assets, net was reduced as of December 31, 2014, 2013 and 2010 as a result of the asset impairment charges of $25.3 million, $7.5 million and $11.9 million for the years then ended, respectively.
(3) Atmel recorded pre-tax, share-based compensation expense of $38.9 million and $45.8 million for the nine months ended September 30, 2015 and 2014, respectively, and $59.7 million, $43.1 million, $72.4 million, $68.1 million and $60.5 million for the years ended December 31, 2014, 2013, 2012, 2011 and 2010, respectively, excluding acquisition-related stock compensation expenses.
(4) Atmel recorded $10.6 million and $10.3 million for the nine months ended September 30, 2015 and 2014, respectively, and $13.8 million, $5.5 million, $7.4 million, $5.4 million and $1.6 million in acquisition-related charges for the years ended December 31, 2014, 2013, 2012, 2011 and 2010, respectively.

 

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Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined balance sheet and statements of income are presented to give effect to the acquisition of Atmel by Microchip. The pro forma information was prepared based on the historical financial statements and related notes of Microchip and Atmel (which are incorporated by reference in this document), as adjusted for the pro forma impact of applying the acquisition method of accounting in accordance with U.S. GAAP. The pro forma adjustments are based upon available information and assumptions that Microchip believes are reasonable. The allocation of the purchase price of the Atmel acquisition reflected in these unaudited pro forma combined financial statements has been based upon preliminary estimates of the fair value of assets acquired and liabilities assumed. The pro forma adjustments are therefore preliminary and have been prepared to illustrate the estimated effect of the acquisition.

The unaudited pro forma combined balance sheet has been prepared to reflect the transaction as if the transaction had occurred on December 31, 2015. The unaudited pro forma combined statements of income combine the results of operations of Microchip and Atmel for the fiscal year ended March 31, 2015 and the nine months ended December 31, 2015 as if the transaction had occurred on April 1, 2014.

The unaudited pro forma combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been achieved had Microchip and Atmel been a combined company during the respective periods presented. These unaudited pro forma combined financial statements should be read in conjunction with Microchip’s historical consolidated financial statements and related notes included in its Form 10-K for the fiscal year ended March 31, 2015 filed on May 27, 2015 and in its Form 10-Q for the period ended December 31, 2015 filed on February 5, 2016 as well as Atmel’s historical consolidated financial statements and related notes included in its Form 10-K for the fiscal year ended December 31, 2014 filed on February 26, 2015 and in its Form 10-Q for the period ended September 30, 2015 filed on October 30, 2015. Certain reclassifications have been made to the historical presentation of Atmel to conform to the presentation used in the unaudited pro forma condensed combined financial statements, as further described in Note 5.

The unaudited pro forma combined financial statements were prepared using the acquisition method of accounting with Microchip treated as the acquiring entity. Accordingly, the aggregate value of the consideration paid by Microchip to complete the acquisition will be allocated to the assets acquired and liabilities assumed from Atmel based upon their estimated fair values on the closing date of the acquisition. As of the date of this joint proxy statement/prospectus, Microchip has not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed from Atmel and the related allocations of purchase price, nor has Microchip identified all adjustments necessary to conform Atmel’s accounting policies to Microchip’s accounting policies. Additionally, a final determination of the fair value of assets acquired and liabilities assumed from Atmel will be based on the actual net tangible and intangible assets and liabilities of Atmel that existed as of the closing date. Accordingly, the pro forma purchase price adjustments presented herein are preliminary, and may not reflect any final purchase price adjustments made. Microchip estimated the fair value of Atmel’s assets and liabilities based on discussions with Atmel’s management, due diligence and preliminary work performed by third-party valuation specialists. As the final valuations are being performed, increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments, which may result in material differences from the information presented herein.

Microchip expects to incur costs and realize benefits associated with integrating the operations of Microchip and Atmel. The unaudited pro forma combined financial statements do not reflect the costs of any integration activities or any benefits that may result from operating efficiencies or revenue synergies. The unaudited pro forma condensed combined statement of operations does not reflect any non-recurring charges directly related to the acquisition that the combined company may incur upon completion of the transaction.

 

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Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 2015

(in thousands)

 

     12/31/2015
Microchip
Historical
    9/30/2015
Atmel
Historical
    Pro Forma
Adjustments
(Note 6)
    Footnote
(Note 6)
   Pro Forma
Combined
 

ASSETS

           

Cash and cash equivalents

   $ 331,451      $ 218,741      $ (108,562   (1)    $ 441,630   

Short-term investments

     676,449        —          (676,449   (1)      —     

Accounts receivable, net

     248,006        202,221        —             450,227   

Inventories

     319,524        267,626        275,000      (2)      862,150   

Prepaid expenses and other current assets

     57,291        37,527        —             94,818   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     1,632,721        726,115        (510,011        1,848,825   

Property, plant and equipment, net

     622,842        139,780        —             762,622   

Long-term investments

     1,389,989        —          (1,389,989   (1)      —     

Goodwill

     1,011,227        189,565        1,289,024      (3)      2,489,816   

Intangible assets, net

     654,574        41,361        1,509,739      (4)      2,205,674   

Long-term deferred tax assets

     18,910        158,691        —             177,601   

Other assets

     116,290        45,386        —             161,676   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 5,446,553      $ 1,300,898      $ 898,763         $ 7,646,214   
  

 

 

   

 

 

   

 

 

      

 

 

 

LIABILITIES AND EQUITY

           

Accounts payable

   $ 69,059      $ 72,153      $ —           $ 141,212   

Accrued liabilities

     111,273        119,707        68,100      (5)      299,080   

Current portion of long-term debt

     —          9,367        —             9,367   

Deferred income on shipments to distributors

     163,582        52,144        (52,144   (6)      163,582   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current liabilities

     343,914        253,371        15,956           613,241   

Senior convertible debentures

     1,203,048        —          —             1,203,048   

Junior convertible debentures

     194,974        —          —             194,974   

Long-term line of credit

     1,008,452        55,000        912,653      (7)      1,976,105   

Long-term income tax payable

     106,081        49,644        —             155,725   

Long-term deferred tax liability

     422,667        —          233,859      (8)      656,526   

Other long-term liabilities

     41,073        81,576        —             122,649   

Stockholders’ equity:

           

Preferred stock

     —          —          —             —     

Common stock

     203        420        (420   (9)      203   

Additional paid-in capital

     1,385,815        783,097        (185,495   (9)      1,983,417   

Treasury stock

     (837,387     —          —             (837,387

Accumulated other comprehensive loss

     (10,665     (15,144     15,144      (9)      (10,665

Retained earnings

     1,588,378        89,946        (89,946   (9)      1,588,378   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     2,126,344        858,319        (260,717        2,723,946   

Non-controlling interest

     —          2,988        (2,988   (9)      —     
  

 

 

   

 

 

   

 

 

      

 

 

 

Total equity

     2,126,344        861,307        (263,705        2,723,946   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and equity

   $ 5,446,553      $ 1,300,898      $ 898,763         $ 7,646,214   
  

 

 

   

 

 

   

 

 

      

 

 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED DECEMBER 31, 2015

(in thousands, except per share amounts)

 

     Nine Months
Ended
12-31-2015
Microchip
Historical
    Nine Months
Ended
09-30-2015
Atmel
Historical
    Pro Forma
Adjustments
(Note 6)
    Footnote
(Note 6)
   Pro Forma
Combined
 

Net sales

   $ 1,615,687      $ 911,174      $ —           $ 2,526,861   

Cost of sales

     713,002        489,207        —             1,202,209   
  

 

 

   

 

 

   

 

 

      

 

 

 

Gross profit

     902,685        421,967        —             1,324,652   

Operating expenses:

           

Research and development

     276,958        174,959        —             451,917   

Selling, general and administrative

     223,377        186,812        —             410,189   

Amortization of acquired intangible assets

     126,764        7,500        162,500      (A)      296,764   

Special (income) charges, net

     3,187        6,919        —             10,106   
  

 

 

   

 

 

   

 

 

      

 

 

 
     630,286        376,190        162,500           1,168,976   

Operating income

     272,399        45,777        (162,500        155,676   

Losses on equity method investments

     (289     —          —             (289

Other income (expense):

           

Interest income

     18,610        277        (18,460   (B)      427   

Interest expense

     (77,203     (2,155     (18,825   (C)      (98,183

Other (expense) income, net

     10,163        6,795        —             16,958   
  

 

 

   

 

 

   

 

 

      

 

 

 

Income before income taxes

     223,680        50,694        (199,785        74,589   

Income tax (benefit) provision

     (32,890     28,526        (54,420   (D)      (58,784
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income

     256,570        22,168        (145,365        133,373   

Less: Net loss attributable to noncontrolling interests

     207        25        —             232   
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income attributable to common stockholders

   $ 256,777      $ 22,193      $ (145,365      $ 133,605   
  

 

 

   

 

 

   

 

 

      

 

 

 

Basic net income per common share attributable to common stockholders

   $ 1.26      $ 0.05           $ 0.62   
  

 

 

   

 

 

        

 

 

 

Diluted net income per common share attributable to common stockholders

   $ 1.18      $ 0.05           $ 0.59   
  

 

 

   

 

 

        

 

 

 

Basic common shares outstanding

     203,267        418,072        (407,388   (E)      213,951   
  

 

 

   

 

 

   

 

 

      

 

 

 

Diluted common shares outstanding

     217,280        419,482        (408,762   (E)      228,000   
  

 

 

   

 

 

   

 

 

      

 

 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED MARCH 31, 2015

(in thousands, except per share amounts)

 

     Year Ended
03-31-2015
Microchip
Historical
    Year Ended
12-31-2014
Atmel
Historical
    Pro Forma
Adjustments
(Note 6)
    Footnote
(Note 6)
    Pro Forma
Combined
 

Net sales

   $ 2,147,036      $ 1,413,334      $ —          $ 3,560,370   

Cost of sales

     917,472        794,704        —            1,712,176   
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

     1,229,564        618,630        —            1,848,194   

Operating expenses:

          

Research and development

     349,543        274,568        —            624,111   

Selling, general and administrative

     274,815        262,031        —            536,846   

Amortization of acquired intangible assets

     176,746        8,900        208,100        (A)        393,746   

Special (income) charges, net

     2,840        13,900        —            16,740   
  

 

 

   

 

 

   

 

 

     

 

 

 
     803,944        559,399        208,100          1,571,443   

Operating income

     425,620        59,231        (208,100       276,751   

Losses on equity method investments

     (317     —          —            (317

Other income (expense):

          

Interest income

     19,527        1,721        (19,327     (B     1,921   

Interest expense

     (62,034     (2,618     (25,100     (C)        (89,752

Loss on retirement of convertible debentures

     (50,631     —          —            (50,631

Other income (expense), net

     13,742        (1,108     —            12,634   
  

 

 

   

 

 

   

 

 

     

 

 

 

Income before income taxes

     345,907        57,226        (252,527       150,606   

Income tax (benefit) provision

     (19,418     22,018        (68,463     (D)        (65,863
  

 

 

   

 

 

   

 

 

     

 

 

 

Net income

     365,325        35,208        (184,064       216,469   

Less: Net loss (income) attributable to noncontrolling interests

     3,684        (3,013     —            671   
  

 

 

   

 

 

   

 

 

     

 

 

 

Net income attributable to common stockholders

   $ 369,009      $ 32,195      $ (184,064     $ 217,140   
  

 

 

   

 

 

   

 

 

     

 

 

 

Basic net income per common share attributable to common stockholders

   $ 1.84      $ 0.08          $ 1.03   
  

 

 

   

 

 

       

 

 

 

Diluted net income per common share attributable to common stockholders

   $ 1.65      $ 0.08          $ 0.93   
  

 

 

   

 

 

       

 

 

 

Basic common shares outstanding

     200,937        419,103        (408,393     (E)        211,647   
  

 

 

   

 

 

   

 

 

     

 

 

 

Diluted common shares outstanding

     223,561        420,910        (410,153     (E)        234,318   
  

 

 

   

 

 

   

 

 

     

 

 

 

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

 

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

NOTE 1—DESCRIPTION OF THE TRANSACTION

On January 19, 2016, Microchip and Atmel announced that Microchip had signed a definitive agreement to acquire Atmel for $8.15 per share in a combination of cash and Microchip’s common stock. The acquisition price represents a total equity value of about $3.55 billion, and a total enterprise value of about $3.40 billion, after excluding Atmel’s cash and investments net of debt on its balance sheet of approximately $155.0 million at September 30, 2015.

Under the terms of the agreement, stockholders of Atmel will receive $7.00 per share in cash and $1.15 per share in Microchip’s common stock, valued at the average closing price for a share of Microchip’s common stock for the ten most recent trading days ending on the last trading day prior to the closing, with the maximum number of Microchip’s shares to be issued in the transaction being 13.0 million. To the extent that the number of Microchip’s shares issuable would exceed 13.0 million, the cash consideration per Atmel share will be increased such that the value of the combined cash and stock consideration will remain at $8.15 per share (as valued based upon the average closing price described in the previous sentence). Microchip expects to fund the cash portion of the purchase price through a combination of cash on its balance sheet and borrowings under its existing credit facility.

The transaction has been approved by the Board of Directors of each company and is expected to close in the second quarter of calendar year 2016, subject to approval by Atmel’s stockholders, regulatory approvals and other customary closing conditions. No approval by Microchip’s stockholders is required in connection with the transaction. The transaction is not subject to any financing conditions.

NOTE 2—BASIS OF PRO FORMA PRESENTATION

The unaudited pro forma combined balance sheet has been prepared to reflect the transaction as of December 31, 2015. The unaudited pro forma combined statements of operations combine the results of operations of Microchip and Atmel for the fiscal year ended March 31, 2015 and the nine months ended December 31, 2015 as if the transaction had occurred on April 1, 2014. The unaudited pro forma combined balance sheet as of December 31, 2015 was prepared utilizing the Atmel historical balance sheet as of September 30, 2015. The unaudited pro forma combined statements of operations for the nine months ended December 31, 2015 and for the year ended March 31, 2015 was prepared utilizing the Atmel historical income statements for the nine months ended September 30, 2015 and the year ended December 31, 2014, respectively.

The unaudited pro forma combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been achieved had Microchip and Atmel been a combined company during the respective periods presented. These unaudited pro forma combined financial statements should be read in conjunction with Microchip’s historical consolidated financial statements and related notes included in its Form 10-K for the fiscal year ended March 31, 2015 filed on May 27, 2015 and in its Form 10-Q for the period ended December 31, 2015 filed on February 5, 2016 as well as Atmel’s historical consolidated financial statements and related notes included in its Form 10-K for the fiscal year ended December 31, 2014 filed on February 26, 2015 and in its Form 10-Q for the period ended September 30, 2015 filed on October 30, 2015. Certain reclassifications have been made to the historical presentation of Microchip and Atmel to conform to the presentation used in the unaudited pro forma condensed combined financial statements, as described below in Note 5.

Microchip expects to incur costs and realize benefits associated with integrating the operations of Microchip and Atmel. The unaudited pro forma combined financial statements do not reflect the costs of any integration activities or any benefits that may result from operating efficiencies or revenue synergies. The unaudited pro forma condensed combined statement of operations does not reflect any non-recurring charges directly related to the acquisition that the combined company may incur upon completion of the transaction.

 

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NOTE 3—ESTIMATED PRELIMINARY PURCHASE PRICE CONSIDERATION

The table below represents the total estimated preliminary purchase price consideration (amounts in thousands):

 

Total number of Atmel common shares outstanding as of September 30, 2015

     420,292   

$7.00 per share cash portion of purchase price

   $ 2,942,044   

$1.15 per share stock portion of purchase price

     483,336   

Payment for vested share-based payment awards

     8,309   

Exchange of unvested share-based payment awards

     114,266   
  

 

 

 
   $ 3,547,955   
  

 

 

 

NOTE 4—ESTIMATED PRELIMINARY PURCHASE PRICE ALLOCATION

The table below represents the estimated preliminary purchase price allocation (amounts in thousands):

 

     Fair Value  

Assets acquired

  

Cash and cash equivalents

   $ 218,741   

Accounts receivable, net

     202,221   

Inventories

     542,626   

Prepaid expenses and other current assets

     37,527   

Property, plant and equipment, net

     139,780   

Goodwill

     1,478,589   

Intangible assets

     1,551,100   

Long-term deferred tax asset

     158,691   

Other assets

     45,386   
  

 

 

 

Total assets acquired

     4,374,661   

Liabilities assumed

  

Accounts payable

     (72,153

Other current liabilities

     (197,174

Long-term line of credit

     (192,300

Long-term deferred tax liabilities

     (233,859

Long-term income tax payable

     (49,644

Other long-term liabilities

     (81,576
  

 

 

 

Total liabilities assumed

     (826,706
  

 

 

 

Purchase price allocated

   $ 3,547,955   
  

 

 

 

The final determination of the purchase price allocation will be based on the actual net tangible and intangible assets of Atmel as of the close of the acquisition and completion of the valuation of such net assets. Microchip anticipates that the final purchase price allocation will differ from that shown above.

NOTE 5—RECLASSIFICATION ADJUSTMENTS

Certain reclassifications have been made to the historical presentation of Atmel to conform to the presentation used in the unaudited pro forma condensed combined financial statements. They include the following:

Unaudited pro forma condensed combined balance sheet

 

    Approximately $54.1 million reclassified from prepaids and other current assets to long-term deferred tax assets.

 

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    Approximately $104.6 million reclassified from other assets to long-term deferred tax assets.

 

    Approximately $49.6 million reclassified from other long-term liabilities to long-term income tax payable.

Unaudited pro form condensed combined statements of income

 

    Amortization of acquired intangible assets includes approximately $7.5 million for the nine months ended September 30, 2015 and approximately $8.9 million for the year ended December 31, 2015 that were included in acquisition-related charges in Atmel’s historical income statements.

 

    Interest expense includes approximately $2.2 million and $2.6 million for the nine months ended September 30, 2015 and year ended December 31, 2015, respectively, that were included in interest and other income (expense), net in Atmel’s historical income statements.

 

    Interest income includes approximately $0.3 million and $1.7 million for the nine months ended September 30, 2015 and year ended December 31, 2015, respectively, that were included in interest and other income (expense), net in Atmel’s historical income statements.

NOTE 6—PRO FORMA ADJUSTMENTS

The following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements:

Adjustments to the pro forma condensed combined balance sheet:

(1) The pro forma adjustments to cash and cash equivalents, short-term and long-term investments reflects the cash paid for the acquisition as follows (amounts in thousands):

 

Cash portion of purchase consideration

   $ 2,950,353   

Proceeds from line of credit

     (775,353
  

 

 

 

Total cash and cash equivalents, short-term and long-term investments used for purchase consideration

   $ 2,175,000   
  

 

 

 

(2) The pro forma adjustment to inventory reflects approximately $275 million of fair value write-up of acquired inventory at the assumed acquisition date. The increased valuation of the inventory will increase cost of sales as the acquired inventory is sold after the closing date of the acquisition. There is no continuing effect of the acquired inventory adjustment on the combined operating results and, as such, this adjustment is not included in the unaudited pro forma condensed combined statements of income.

(3) The pro forma adjustment to goodwill includes the following (amounts in thousands):

 

Elimination of Atmel’s historical goodwill balance

     $ (189,565

Addition of goodwill as a result of the estimated preliminary purchase price allocation

     1,478,589   
  

 

 

 

Total pro forma adjustment to goodwill

   $ 1,289,024   
  

 

 

 

(4) The pro forma adjustment to intangible assets, net includes the following (amounts in thousands):

 

Elimination of Atmel’s historical intangible asset balance

     $ (41,361

Addition of intangible assets as a result of the estimated preliminary purchase price allocation (1)

     1,551,100   
  

 

 

 

Total pro forma adjustment to intangible assets, net

   $ 1,509,739   
  

 

 

 

 

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(1) The addition of intangible assets as a result of the estimated preliminary purchase price allocation is comprised of the following:

 

     Estimated useful life
(in years)
   (in thousands)  
       

Developed technology

   10-15    $ 988,400   

In-process technology

   10-15      114,500   

Customer relationships

   5      435,900   

Product backlog

   1-2      12,300   
     

 

 

 

Total purchased intangible assets

      $ 1,551,100   
     

 

 

 

(5) The pro forma adjustments to accrued liabilities include the following (amounts in thousands):

 

Non-recurring acquisition related costs

   $ 42,000   

Accrual for payments due to distributors for price adjustments (1)

     26,100   
  

 

 

 

Total pro forma adjustments to accrued liabilities

   $ 68,100   
  

 

 

 

 

(1) Represents estimated future claims for sales to distributors for which revenue is recognized on a sell-through basis, primarily in the U.S. and Europe.

(6) The pro forma adjustment to deferred income to distributors reflects the amount of deferred margin recorded by Atmel which Microchip will not recognize subsequent to the acquisition.

(7) The pro forma adjustments to the long-term line of credit include the following (amounts in thousands):

 

Portion of purchase consideration funded by the long-term line of credit

   $  775,353   

Payment related to the termination of the Dialog and Atmel merger agreement

     137,300   
  

 

 

 

Total pro forma adjustments to the long-term line of credit

   $ 912,653   
  

 

 

 

(8) The pro forma adjustments to long-term deferred tax liabilities include deferred tax liabilities (assets) established on the following preliminary purchase price allocation adjustments (amounts in thousands):

 

Inventory

   $  101,338   

Purchased intangible assets

     142,932   

Accrued liabilities

     (29,626

Deferred income on shipments to distributors

     19,215   
  

 

 

 

Total pro forma adjustments to long-term deferred tax liabilities

   $ 233,859   
  

 

 

 

(9) The pro forma adjustments to total equity include the following (amounts in thousands):

 

Elimination of pre-acquisition Atmel equity balances

   $ (861,307

Impact of shares to be delivered as part of the stock portion of purchase consideration

     597,602   
  

 

 

 

Total pro forma adjustment to total equity

   $ (263,705
  

 

 

 

 

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Adjustments to the pro forma condensed combined statements of income:

(A) The amortization of acquired intangible assets pro forma adjustments are as follows (amounts in thousands):

 

     Nine months ended
December 31, 2015
    Year ended
March 31, 2015
 
      

Elimination of Atmel’s historical acquired intangible asset amortization

   $ (7,500   $ (8,900

Addition of the Microchip’s estimated acquired intangible asset amortization

     170,000        217,000   
  

 

 

   

 

 

 

Total pro forma amortization of acquired intangible assets adjustments

   $ 162,500      $ 208,100   
  

 

 

   

 

 

 

(B) The pro forma adjustments to interest income relates to the lost interest income of Microchip as a result of the $2.175 billion of Microchip’s cash used to fund the transaction.

(C) The pro forma adjustment to interest expense relates to the interest charge on additional borrowings under Microchip’s revolving credit facility. The interest was calculated using a 2.75% interest rate on approximately $912.7 million of borrowings against the line of credit. The effect on pro forma net income utilizing an interest rate of 2.625% would be approximately $0.5 million and $0.7 million for the nine months ended December 31, 2015 and the year ended March 31, 2015, respectively. The effect on pro forma net income utilizing an interest rate of 2.875% would be approximately $(0.5) million and $(0.7) million for the nine months ended December 31, 2015 and the year ended March 31, 2015, respectively.

(D) The pro forma adjustments to income tax provision (benefit) are as follows (amounts in thousands):

 

     Assumed
tax rate
applied
    Nine months ended
December 31, 2015
    Year ended
March 31, 2015
 

Elimination of Atmel’s historical acquired intangible asset amortization

     25 %(1)      1,875        2,225   

Addition of Microchip’s estimated acquired intangible asset amortization

     25 %(1)      (42,500     (54,250

Lost interest income and interest expense on line of credit borrowings

     37 %(2)      (13,795     (16,438
    

 

 

   

 

 

 

Total pro forma adjustments to income tax provision

     $ (54,420   $ (68,463
    

 

 

   

 

 

 

 

(1) 25% is the assumed tax rate of Atmel’s ongoing business activities
(2) 37% is the assumed combined U.S, federal and state tax rate

(E) The pro forma adjustments to basic and diluted common shares outstanding were calculated based on a conversion ratio of .0255. This conversion ratio was calculated by dividing the $1.15 per share equity portion of the purchase consideration by an assumed Microchip stock price of $45.00.

 

(in thousands, except ratios)

   Nine months ended
December 31, 2015
     Year ended
March 31, 2015
 

Basic common shares outstanding—Atmel historical

     418,072         419,103   

Exchange ratio

     0.0255         0.0255   
  

 

 

    

 

 

 
     10,684         10,710   

Microchip’s historical basic common shares outstanding

     203,267         200,937   
  

 

 

    

 

 

 

Pro forma basic common shares outstanding

     213,951         211,647   
  

 

 

    

 

 

 

Diluted common shares outstanding—Atmel historical

     419,482         420,910   

Exchange ratio

     0.0255         0.0255   
  

 

 

    

 

 

 
     10,720         10,757   

Microchip’s historical diluted common shares outstanding

     217,280         223,561   
  

 

 

    

 

 

 

Pro forma diluted common shares outstanding

     228,000         234,318   
  

 

 

    

 

 

 

 

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Table of Contents

UNAUDITED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The table set forth below contains selected unaudited historical, pro forma and pro forma equivalent per share information for shares of Microchip common stock and shares of Atmel common stock. The unaudited pro forma and pro forma equivalent per share information gives effect to the Merger as if it had occurred on December 31, 2015 for book value per share data and April 1, 2014 for net earnings per share data.

Historical per Share Data for Microchip Common Stock and Atmel Common Stock

The historical per share data for shares of Microchip common stock and shares of Atmel common stock below is derived from the audited consolidated financial statements of each of Microchip and Atmel as of and for the year ended March 31, 2015 and December 31, 2014, respectively, and the unaudited condensed consolidated financial statements of Microchip as of and for the nine months ended December 31, 2015 and Atmel as of and for the nine months ended September 30, 2015.

Combined Unaudited Pro Forma per Share Data for Microchip Common Stock

The combined unaudited pro forma per share data for Microchip common stock is extracted from the pro forma combined financial information appearing elsewhere in this proxy statement/prospectus. The pro forma combined financial information is based on, and should be read in conjunction with, the historical consolidated financial statements and accompanying notes of each of Microchip and Atmel for the applicable periods, which are incorporated by reference into this proxy statement/prospectus. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 19 of this proxy statement/prospectus for more information.

The combined unaudited pro forma per share data for Microchip common stock does not purport to represent what Microchip’s actual results of operations or financial condition would have been had the acquisition occurred on the dates assumed, nor is it necessarily indicative of Microchip’s future results of operations or financial condition. In particular, the unaudited pro forma combined financial information does not reflect the effect of anticipated cost and revenue synergies associated with the combination of Microchip and Atmel.

Combined Unaudited Pro Forma per Atmel Equivalent Share Data

The combined unaudited pro forma per Atmel equivalent share data set forth below shows the effect of the Merger from the perspective of an owner of Atmel common stock.

Generally

You should read the below information in conjunction with the selected consolidated financial information of Microchip and Atmel included elsewhere in this proxy statement/prospectus, the historical consolidated financial statements of Microchip and related notes that have been filed with the SEC, certain of which are incorporated by reference into this proxy statement/prospectus, and the historical consolidated financial statements of Atmel and related notes that have been filed with the SEC, certain of which are incorporated by reference into this proxy statement/prospectus. See the sections entitled “Selected Historical Consolidated Financial Data of Microchip” beginning on page 15 of this proxy statement/prospectus, “Selected Historical Consolidated Financial Data of Atmel” beginning on page 17 of this proxy statement/prospectus and “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

 

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Table of Contents
     As of and for the
nine months
ended
December 31,

2015
     As of and for
the year
ended
March 31,
2015
 
     ($)  

Microchip Historical Data:

     

Basic earnings per share

     1.26         1.84   

Diluted earnings per share

     1.18         1.65   

Cash dividends declared per share

     1.074         1.425   

Book value at the end of the period (in thousands)

     2,126,344         2,061,026   

Number of shares in issue at the end of the period (in thousands)

     203,499         202,080   

Book value per share

     10.45         10.20   

Unaudited Combined Unaudited Pro Forma per Microchip Equivalent Share Data:

     

Basic earnings per share

     0.62         1.03   

Diluted earnings per share

     0.59         0.93   

Cash dividends declared per share

     1.074         1.425   

Book value at the end of the period (in thousands)

     2,725,117         N/A   

Number of shares in issue at the end of the period (in thousands)

     216,805         N/A   

Book value per share

     12.57         N/A   

Unaudited Combined Unaudited Pro Forma per Atmel Equivalent Share Data:

     

Basic earnings per share

     0.11         0.19   

Diluted earnings per share

     0.11         0.17   

Cash dividends declared per share

     0.19         0.26   

Book value per share

     2.28         N/A   
     As of and for the
nine months
ended
September 30,
2015
     As of and for
the year
ended
December 31,
2014
 
     ($)  

Atmel Historical Data:

     

Basic earnings per share

     0.05         0.08   

Diluted earnings per share

     0.05         0.08   

Cash dividends declared per share

     0.12         0   

Book value at the end of the period (in thousands)

     861,307         869,999   

Number of shares in issue at the end of the period (in thousands)

     420,292         416,178   

Book value per share

     2.05         2.09   

 

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COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION (UNAUDITED)

Shares of Microchip’s common stock are listed for trading on NASDAQ under the symbol “MCHP.” Shares of Atmel common stock are listed for trading on NASDAQ under the symbol “ATML.”

Historical Market Price Information

The following table sets forth, for the periods indicated, the intraday high and low sales prices per share of Microchip common stock and per share of Atmel common stock, in both cases as reported on NASDAQ.

On January 15, 2016, the last trading day before the execution of the Merger Agreement, the closing price of a share of Microchip common stock on NASDAQ was $40.52. On February 8, 2016, the last practicable trading day prior to the date of this proxy statement/prospectus, the closing price of a share of Microchip common stock on NASDAQ was $41.22.

On January 15, 2016, the last trading day before the execution of the Merger Agreement, the closing price of a share of Atmel common stock on NASDAQ was $7.90. On February 8, 2016, the last practicable trading day prior to the date of this proxy statement/prospectus, the closing price of a share of Atmel common stock on NASDAQ was $8.05.

On January 31, 2016, the last practicable day prior to the date of this proxy statement/prospectus, there were 203,501,339 Microchip common stock outstanding and 421,332,253 shares of Atmel common stock outstanding. As of such date, Microchip had 302 holders of record of its common stock and Atmel had 1,158 holders of record of its common stock.

 

     MCHP      ATML  
     High      Low      Dividend
Paid (per
share)
     High      Low      Dividend
Paid (per share)
 
     ($)      ($)  

Year Ended December 31, 2013

                 

Quarter ended March 31, 2013

     37.63         32.38       $ 0.3530         7.46         6.07       $ 0.00   

Quarter ended June 30, 2013

     38.35         33.72       $ 0.3535         8.40         5.89       $ 0.00   

Quarter ended September 30, 2013

     41.78         37.18       $ 0.3540         8.21         7.09       $ 0.00   

Quarter ended December 31, 2013

     44.95         38.46       $ 0.3545         7.91         6.45       $ 0.00   

Year Ended December 31, 2014

                 

Quarter ended March 31, 2014

     48.47         43.14       $ 0.3550         8.91         7.31       $ 0.00   

Quarter ended June 30, 2014

     49.72         45.45       $ 0.3555         9.76         7.48       $ 0.00   

Quarter ended September 30, 2014

     50.04         44.78       $ 0.3560         9.57         7.74       $ 0.00   

Quarter ended December 31, 2014

     47.26         36.92       $ 0.3565         8.68         6.32       $ 0.00   

Year Ended December 31, 2015

                 

Quarter ended March 31, 2015

     52.44         42.50       $ 0.3570         9.11         7.65       $ 0.04   

Quarter ended June 30, 2015

     50.71         44.26       $ 0.3575         10.50         7.30       $ 0.04   

Quarter ended September 30, 2015

     47.96         37.77       $ 0.3580         9.91         5.84       $ 0.04   

Quarter ended December 31, 2015

     49.84         41.35       $ 0.3585         8.80         7.14       $ 0.00   

Recent Closing Prices and Comparative Market Price Information

The following table presents the closing prices of Microchip common stock and Atmel common stock on NASDAQ on January 15, 2016, the last trading day before the announcement of the execution of the Merger Agreement, and February 8, 2016, the most recent practicable date prior to the date of this proxy statement/prospectus. The table also presents the closing prices of Microchip common stock on each such date, calculated by averaging the closing prices for shares of Microchip common stock on each of the trading days during the period of ten trading days ending on the last trading day prior to such date. The table also presents the per share

 

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Stock Consideration that an Atmel stockholder would be entitled to receive as part of the Merger Consideration using the ten-trading day average closing price of Microchip common stock ending on the last trading day prior to such date and assuming that the total number of shares of Microchip common stock issuable to stockholders of Atmel does not exceed 13.0 million.

 

     Microchip
Common
Stock (Close)
     Microchip
Common Stock
(Ten-Trading
Day Average
Close)
     Atmel Common
Stock (Close)
     Per Share
Stock
Consideration
 

January 15, 2016

   $ 40.52       $ 42.80       $ 7.90         0.026872   

February 8, 2016

     $41.22         $43.17         $8.05         0.026641   

The market prices of shares of Microchip and Atmel common stock fluctuate. The per share Stock Consideration, and the number of shares of Microchip common stock received by a holder of Atmel common stock, will be determined based on the average ten-trading day Microchip common stock closing price ending on the last trading day immediately prior to the Closing. In addition, Microchip will not issue more than 13.0 million shares of Microchip common stock in the Merger; and to the extent that the number of shares of Microchip common stock issuable in the Merger would exceed 13.0 million shares, the Cash Consideration per share of Atmel common stock will be increased such that the value of the combined Cash Consideration and Stock Consideration will remain at $8.15 per share (based upon the average price described in the previous sentence). Therefore, the value of the Stock Consideration on the last trading day immediately prior to the Closing may be higher or lower than the value of the Stock Consideration on the Closing Date and holders of Atmel common stock could receive more than $7.00 per share in cash. As a result, we urge you to obtain current market quotations of Microchip and Atmel common stock.

Dividend Policy

Microchip’s Dividend Policy: The holders of Microchip common stock will receive dividends if and when declared by the Microchip Board out of legally available funds or, in the case of stock dividends, out of authorized and available shares of Microchip common stock. Microchip has been declaring and paying quarterly cash dividends on Microchip common stock since the third quarter of its fiscal year ended March 31, 2003. Microchip’s total cash dividends paid were $286.5 million, $281.2 million and $273.8 million in its fiscal years ended March 31, 2015, 2014 and 2013, respectively. The Microchip Board is free to change Microchip’s dividend practices at any time and to increase or decrease the dividend paid, or not to pay a dividend, on Microchip common stock on the basis of Microchip’s results of operations, financial condition, cash requirements and future prospects, and other factors deemed relevant by the Microchip Board. Microchip’s current intent is to provide for ongoing quarterly cash dividends depending upon market conditions and Microchip’s results of operations.

Atmel’s Dividend Policy. Prior to 2015, Atmel had never declared or paid any cash dividends on its capital stock. On February 4, 2015, Atmel announced the initiation of a quarterly cash dividend, commencing in the first quarter of 2015. The Merger Agreement prohibits Atmel from authorizing or paying dividends or making distributions on its capital stock, so Atmel does not expect to pay dividends for as long as the Merger Agreement is in effect. In addition, Atmel’s credit agreement limits its and its subsidiaries’ ability to pay dividends or make any other distribution or payment on account of Atmel’s capital stock.

 

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RISK FACTORS

In addition to the other information included and incorporated by reference in this proxy statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 42 of this proxy statement/prospectus, you should carefully consider the following risks before deciding whether to vote for the adoption of the Merger Agreement. In addition, you should read and consider the risks associated with each of the businesses of Microchip and Atmel because these risks will also affect Microchip after the Merger. These risks can be found in the Annual Reports on Form 10-K for Microchip for the fiscal year ended March 31, 2015, and for Atmel for the fiscal year ended December 31, 2014, and any amendments thereto, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this proxy statement/prospectus. The risks and uncertainties described below are not the only risks and uncertainties the parties may face. Additional risks and uncertainties not presently known to the parties, or that the parties currently consider immaterial, could also negatively affect the business, financial condition, results of operations, prospects, profits and stock prices of Microchip (including after the Merger) or Atmel. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference in this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus.

Risk Factors Relating to the Merger

Because the market price of Microchip common stock will fluctuate, Atmel stockholders cannot be sure of the number of shares of Microchip common stock they will receive at the time of the special meeting or at any time prior to the Closing of the Merger.

Upon completion of the Merger, each share of Atmel common stock will be converted into the right to receive Merger Consideration consisting of shares of Microchip common stock and cash pursuant to the terms of the Merger Agreement. The value of the Merger Consideration to be received by Atmel stockholders will equal $8.15 per share, subject to adjustment in certain cases as further discussed under the section entitled “The Merger Agreement—The Merger” beginning on page 99 of this proxy statement/prospectus. However, the number of shares of Microchip common stock that an Atmel stockholder will receive upon completion of the Merger will be based on the average of the closing price for a share of Microchip common stock for the ten most recent trading days ending on the last trading day immediately prior to the Closing. This average price may vary from the closing price of Microchip common stock on the date we announced the Merger, on the date that this proxy statement/prospectus was mailed to Atmel stockholders, on the date of the special meeting and on the Closing Date. Any change in the market price of Microchip common stock prior to completion of the Merger will affect the number of shares of Microchip common stock that Atmel stockholders will receive upon completion of the Merger. In addition, Microchip will not issue more than 13.0 million shares of Microchip common stock in the Merger. Accordingly, at the time of the special meeting, Atmel stockholders will not necessarily know or be able to calculate the number of any shares of Microchip common stock they would receive upon completion of the Merger. Neither company is permitted to terminate the Merger Agreement or resolicit the vote of Atmel’s stockholders solely because of changes in the market prices of either company’s stock. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond our control. You should obtain current market quotations for shares of Microchip common stock and for shares of Atmel common stock.

The Merger is subject to a number of conditions, some of which are outside of the parties’ control, and, if these conditions are not satisfied, the Merger Agreement may be terminated and the Merger may not be completed.

The Merger Agreement contains a number of conditions that must be fulfilled to complete the Merger. These conditions include, among other customary conditions, adoption by Atmel stockholders of the Merger Agreement, no action being taken by any governmental entity having jurisdiction enjoining or otherwise prohibiting consummation of the Merger or instituting proceedings seeking the same, no law having been passed

 

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by any governmental entity making the consummation of the Merger illegal, receipt of certain specified regulatory approvals, approval by NASDAQ for listing of the shares of Microchip common stock to be issued in the Merger, accuracy of representations and warranties of the parties to the applicable standard provided by the Merger Agreement, no event occurring that had or would reasonably be expected to have a Material Adverse Effect (as defined below) on Microchip or Atmel, compliance by the parties with their covenants in the Merger Agreement in all material respects and the effectiveness of the registration statement of which this proxy statement/prospectus forms a part.

The required satisfaction of the foregoing conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause Microchip not to realize some or all of the benefits that the parties expect Microchip to achieve following the Merger. Further, there can be no assurance that the conditions to Closing will be satisfied or waived or that the Merger will be completed.

In addition, if the Merger is not completed by July 17, 2016 (subject to a potential extension to October 15, 2016), either Microchip or Atmel may choose to terminate the Merger Agreement. Microchip or Atmel may also elect to terminate the Merger Agreement in certain other circumstances, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the Closing, before or after stockholder approval, as applicable. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 119 of this proxy statement/prospectus for a more detailed description of these circumstances.

Failure to complete the Merger could negatively affect the share prices and the future business and financial results of either or both of Microchip and Atmel.

If the Merger is not completed, the ongoing businesses of either or both of Microchip and Atmel may be adversely affected. Additionally, if the Merger is not completed and the Merger Agreement is terminated, in certain circumstances Microchip may be required to pay Atmel a termination fee of $250.0 million and Atmel may be required to pay Microchip a termination fee of $137.3 million. Additionally, in the event that either Microchip or Atmel terminates the Merger Agreement as a result of the failure by Atmel’s stockholders to approve the Merger, Atmel must reimburse Microchip for reasonable out-of-pocket costs incurred in connection with the Merger up to $20.0 million. See the sections entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page 119 of this proxy statement/prospectus and “The Merger Agreement—Termination Fees” beginning on page 120 of this proxy statement/prospectus for a more detailed description of these circumstances. In addition, Microchip and Atmel have incurred and will continue to incur significant transaction expenses in connection with the Merger regardless of whether the Merger is completed. Furthermore, Microchip or Atmel may experience negative reactions from the financial markets, including negative impacts on their stock prices, or negative reactions from their customers, suppliers or other business partners, should the Merger not be completed.

The foregoing risks, or other risks arising in connection with the failure to consummate the Merger, including the diversion of management attention from conducting the business of the respective companies and pursuing other opportunities during the pendency of the Merger, may have a material adverse effect on the businesses, operations, financial results and stock prices of Microchip and Atmel. Either or both of Microchip or Atmel could also be subject to litigation related to any failure to consummate the Merger or any related action that could be brought to enforce a party’s obligations under the Merger Agreement.

Litigation against Microchip and Atmel, or the members of the Atmel Board, could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

While Atmel and Microchip believe that any claims that may be asserted by purported stockholder plaintiffs related to the Merger would be without merit, the results of any such potential legal proceedings are difficult to predict, and could delay or prevent the Merger from becoming effective in a timely manner. The existence of litigation related to the Merger could affect the likelihood of obtaining the required approval from Atmel

 

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stockholders. Moreover, any litigation could be time consuming and expensive, could divert Microchip’s and Atmel’s management’s attention away from their regular business and, if any lawsuit is adversely resolved against either Microchip, Atmel or members of the Atmel Board (each of whom Atmel is required to indemnify pursuant to indemnification agreements), could have a material adverse effect on Microchip’s or Atmel’s financial condition.

One of the conditions to Closing is that no governmental entity having jurisdiction over Microchip or Atmel shall have issued an order, decree or ruling or taken any other action enjoining or otherwise prohibiting the completion of the Merger substantially on the terms contemplated by the Merger Agreement, that no law shall have been enacted or promulgated by any such governmental entity that makes the completion of the Merger illegal and that no such governmental entity shall have instituted proceedings seeking any such law or order. Consequently, if a settlement or other resolution is not reached in any lawsuit that is filed and a claimant secures injunctive or other relief prohibiting, delaying or otherwise adversely affecting Microchip’s and/or Atmel’s ability to complete the Merger on the terms contemplated by the Merger Agreement, then such injunctive or other relief may prevent the Merger from becoming effective in a timely manner or at all.

The Merger Agreement contains provisions that limit Atmel’s ability to pursue alternatives to the Merger, could discourage a potential competing acquiror of Atmel from making an alternative transaction proposal and, in specified circumstances, could require Atmel to pay a termination fee to Microchip.

The Merger Agreement provides that Atmel shall not, and requires Atmel to refrain from, authorizing, directing or permitting its representatives to, solicit, participate in negotiations with respect to or approve or recommend any third-party proposal for an alternative transaction, subject to exceptions set forth in the Merger Agreement relating to the receipt of certain unsolicited offers. If the Merger Agreement is terminated by either party after the Atmel Board of directors has changed its recommendation regarding the Merger or due to Atmel’s material breach of its non-solicitation obligations, then Atmel may be required to pay a termination fee of $137.3 million to Microchip, which fee is in addition to the termination fee of $137.3 million previously paid to Dialog.

These provisions could discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or a significant portion of Atmel or pursuing an alternative transaction from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per share cash or market value than the consideration in the Merger, or might result in a potential third-party acquiror or merger partner proposing to pay a lower price to Atmel stockholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

If the Merger Agreement is terminated and Atmel determines to seek another business combination, Atmel may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger.

The Merger is subject to the expiration of applicable waiting periods under and the receipt of approvals, consents or clearances from domestic and foreign antitrust regulatory authorities that may impose conditions that could have an adverse effect on Microchip or Atmel or, if not obtained, could prevent completion of the Merger.

Before the Merger may be completed, any waiting period (or extension thereof) applicable to the Merger must have expired or been terminated, and any approvals, consents or clearances required in connection with the Merger must have been obtained, in each case, under the HSR Act, and with the German Bundeskartellamt and the South Korean Fair Trade Commission, as applicable. In deciding whether to grant the required regulatory approval, consent or clearance, the relevant governmental entities will consider the effect of the Merger on competition within their relevant jurisdiction. The terms and conditions of the approvals, consents and clearances that are granted may impose requirements, limitations or costs or place restrictions on the conduct of Microchip’s business and which may adversely affect the financial position and prospects of Microchip and its ability to achieve the cost savings and other synergies projected to result from the Merger.

 

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Under the Merger Agreement, Microchip and Atmel have agreed to use their reasonable best efforts to obtain any consents, clearances or approvals (provided that such actions do not reduce the reasonably anticipated benefits to Microchip, including anticipated synergies, of the Merger in an amount that is financially material relative to the value of Atmel and its subsidiaries, as a whole) and therefore may be required to comply with conditions or limitations imposed by governmental antitrust authorities. However, there can be no assurance that antitrust regulators will not impose unanticipated conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the Merger or imposing additional costs on or limiting the revenues of Microchip following the completion of the Merger and which may adversely affect the financial position and prospects of Microchip and its ability to achieve the cost savings and other synergies projected to result from the Merger. In addition, neither Microchip nor Atmel can provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the Merger. For a more detailed description of the regulatory review process, see the section entitled “The Merger—Regulatory Clearances Required for the Merger” beginning on page 94 of this proxy statement/prospectus.

In connection with the Merger, the parties are seeking the approval of the French Ministry of the Economy, which may impose conditions that could have an adverse effect on Microchip or Atmel or, if not obtained, could subject Microchip and Atmel to significant penalties.

In connection with the Merger, the parties are seeking the approval of France’s Ministry of the Economy under Articles L. 151-3 and R.153-1 et seq. of the French Monetary and Financial Code. In deciding whether to grant the required regulatory approval, the Ministry of the Economy will consider, in particular, the effect of the Merger on the availability of certain products designed by Atmel’s French subsidiaries and used by the French government. The approval of the French Ministry of the Economy is not a condition to closing the Merger. However, the terms and conditions of the approval may impose requirements, limitations or costs or place restrictions on the conduct of Microchip’s business in France. There can be no assurance that the Ministry of the Economy will not impose unanticipated conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of imposing additional costs on or limiting the revenues of Microchip following the completion of the Merger and which may adversely affect the financial position and prospects of Microchip and its ability to achieve the cost savings and other synergies expected to result from the Merger. In addition, there can be no assurances that the approval of the Ministry of the Economy will be received or will be deemed obtained prior to the date on which Microchip is otherwise obligated to close the Merger. In the event that the approval is refused or is not received at such time, and the Merger is closed Microchip may be ordered to take all appropriate actions to restore the previous situation at its costs and may be subject to fines and other penalties imposed by the Ministry of the Economy in an amount which shall be proportionate to the seriousness of the breach up to a maximum amount representing twice the amount of investment.

Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, in consideration of the agreements made by the parties in the Merger Agreement, Atmel is prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Atmel and its stockholders.

Until the Merger is completed, the Merger Agreement restricts Atmel from taking specified actions without the consent of Microchip, and requires Atmel to operate in the ordinary course of business consistent with past practices. These restrictions may prevent Atmel from making appropriate changes to its businesses, retaining its workforces, paying dividends or pursuing attractive business opportunities that may arise prior to the completion of the Merger. See the section entitled “The Merger Agreement—Restrictions on Atmel’s Business Pending the Closing” beginning on page 106 of this proxy statement/prospectus for a description of the restrictive covenants applicable to Atmel.

 

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The opinion of Atmel’s financial advisor does not reflect changes in circumstances that may occur between the original signing of the Merger Agreement and the completion of the Merger.

Consistent with market practices, the Atmel Board has not obtained an updated opinion from its financial advisor as of the date of this proxy statement/prospectus and does not expect to receive an updated, revised or reaffirmed opinion prior to the completion of the Merger. Changes in the operations and prospects of Atmel, general market and economic conditions and other factors that may be beyond the control of Atmel, and on which Atmel’s financial advisor’s opinion was based, may significantly alter the value of Atmel or the price of shares or Atmel common stock by the time the Merger is completed. The opinion does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion. Because Atmel’s financial advisor will not be updating its opinion, the opinion will not address the fairness of the Merger Consideration from a financial point of view at the time the Merger is completed. The Atmel Board’s recommendation that Atmel stockholders vote “FOR” the Merger Proposal, however, is made as of the date of this proxy statement/prospectus. For a description of the opinion that the Atmel Board received from its financial advisor, see the section entitled “The Merger—Opinion of Atmel’s Financial Advisor” beginning on page 78 of this proxy statement/prospectus.

Atmel stockholders have appraisal rights under Delaware law.

Under Delaware law, Atmel stockholders who do not vote in favor of adoption of the Merger Agreement and otherwise properly perfect their rights will be entitled to “appraisal rights” in connection with the Merger, which generally entitle stockholders to receive in lieu of the Merger Consideration a cash payment of an amount determined by the Court of Chancery equal to be the fair value of their Atmel common stock as of the Effective Time. The appraised value would be determined by the Court of Chancery and could be less than, the same as or more than the Merger Consideration. Under Delaware law, stockholders are generally entitled to statutory interest on an appraisal award at a rate equal to 5% above the Federal Reserve discount rate compounded quarterly from the Closing Date until the award is actually paid. Stockholders who have properly demanded appraisal rights must file a petition for appraisal with the Court of Chancery within 120 days after the effective date of the Merger. Should a material number of Atmel’s stockholders exercise appraisal rights and should the Court determine that the fair value of such shares of Atmel common stock is materially greater than the Merger Consideration, it could have a Material Adverse Effect on the financial condition and results of operation of the surviving corporation. For a more detailed description of the appraisal rights available to Atmel stockholders, see the section entitled “The Merger—Appraisal Rights” beginning on page 95 of this proxy statement/prospectus.

After the Merger, Atmel stockholders will have a significantly lower ownership and voting interest in Microchip than they currently have in Atmel, and will exercise less influence over management.

Based on the number of shares of Atmel common stock outstanding as of January 31, 2016, and the number of shares of Microchip common stock outstanding as of January 31, 2016, and assuming a ten-trading day average closing price of $43.17 (calculated based on the closing prices for the ten trading days ended on February 8, 2016, the most recent practicable range of trading days prior to the date of this proxy statement/prospectus), it is expected that, immediately after completion of the Merger, former Atmel stockholders will receive shares of Microchip common stock in the Merger representing approximately 5.23% of the outstanding shares of Microchip common stock. Consequently, Atmel stockholders will have substantially less influence over the management and policies of Microchip than they currently have over Atmel.

Some of the executive officers and directors of Atmel have interests in seeing the Merger completed that are different from, or in addition to, those of the other Atmel stockholders. Therefore, some of the executive officers and directors of Atmel may have a conflict of interest in recommending the proposals being voted on at the special meeting.

Certain of the executive officers of Atmel have arrangements that provide them with interests in the Merger that are different from, or in addition to, those of stockholders of Atmel generally. These interests include, among

 

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others, the possible continued employment of certain executive officers, the acceleration of vesting of certain equity-based awards, enhanced severance payments and/or benefits, and/or continuation of certain indemnification insurance in connection with the Merger. These interests may influence Atmel’s executive officers to support or approve the proposals to be presented at the special meeting.

In addition, certain directors of Atmel have interests in the Merger that are different from, or in addition to, those of stockholders of Atmel generally, including, the acceleration of vesting of certain equity-based awards. These interests may influence the directors of Atmel to support or approve the proposals to be presented at the special meeting.

See the section entitled “The Merger—Interests of Atmel’s Directors and Executive Officers in the Merger” beginning on page 88 of this proxy statement/prospectus for a more detailed description of these interests.

The shares of Microchip common stock to be received by Atmel stockholders as a result of the Merger will have different rights from the shares of Atmel common stock.

Upon completion of the Merger, Atmel stockholders will become stockholders of Microchip and their rights as stockholders will be governed by the Microchip Charter and the Microchip Bylaws. The rights associated with Atmel common stock are different from the rights associated with shares of Microchip common stock. See the section entitled “Comparison of Stockholders’ Rights” beginning on page 129 of this proxy statement/prospectus.

Risk Factors Related to Microchip Following the Merger

Although Microchip expects to realize certain benefits as a result of the Merger, there is the possibility that Microchip following the Merger may be unable to integrate successfully the business of Atmel to realize the anticipated benefits of the Merger or do so within the intended timeframe.

Microchip will be required to devote significant management attention and resources to integrating the business practices and operations of Atmel with Microchip. Due to legal restrictions, Microchip and Atmel have only been able to conduct limited planning regarding the integration of Atmel into Microchip after completion of the Merger and Microchip has not yet determined the exact nature of how the businesses and operations of Atmel will be run following the Merger. Potential difficulties Microchip may encounter as part of the integration process include the following:

 

    the costs of integration and compliance and the possibility that the full benefits anticipated to result from the Merger will not be realized;

 

    any delay in the integration of management teams, strategies, operations, products and services;

 

    diversion of the attention of each company’s management as a result of the Merger;

 

    differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration;

 

    the ability to create and enforce uniform standards, controls, procedures, policies and information systems;

 

    the challenge of integrating complex systems, technology, networks and other assets of Atmel into those of Microchip in a manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

 

    potential unknown liabilities and unforeseen increased expenses or delays associated with the Merger, including costs to integrate Atmel; and

 

    the disruption of, or the loss of momentum in, each company’s ongoing businesses.

Any of these factors could adversely affect the ability of Microchip following the Merger to maintain relationships with customers, suppliers, employees and other constituencies or its ability to achieve the

 

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anticipated benefits of the Merger or could reduce the earnings or otherwise adversely affect the business and financial results of Microchip after the Merger.

The Merger may not be accretive and may cause dilution to Microchip’s earnings per share, which may harm the market price of Microchip common stock following the Merger.

While the Merger is expected to be immediately accretive to Microchip’s future earnings per share, there can be no assurance with respect to the timing and scope of the accretive effect or whether it will be accretive at all. Microchip following the Merger could encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the Merger or a downturn in its business. All of these factors could cause dilution to Microchip’s earnings per share following the Merger or decrease the expected accretive effect of the Merger and cause a decrease in the price of shares of Microchip common stock following the Merger.

After paying the Cash Consideration to the former Atmel stockholders upon the Closing of the Merger, Microchip will have a substantially lower balance of cash, cash equivalents, short-term investments and long-term investments and increased borrowings under its credit agreement.

At December 31, 2015, Microchip’s balance of cash, cash equivalents, short-term investments and long-term investments held by its foreign subsidiaries was $2.381 billion and it balance of cash, cash equivalents, short-term investments and long-term investments available for its U.S. operations was approximately $16.6 million. Microchip’s credit agreement provides for borrowings of up to $2.774 billion, and at December 31, 2015, Microchip had $1.009 billion of outstanding borrowings under such credit agreement. Microchip currently expects to finance the purchase price of the Merger using approximately $2.175 billion of cash, cash equivalents, short-term investments and long-term investments held by certain of its foreign subsidiaries, approximately $782 million from additional borrowings under its credit agreement and approximately $485 million in newly issued shares of its common stock. The acquisition has been structured in a manner that is intended to enable Microchip to utilize a substantial portion of the cash, cash equivalents, short-term investments and long-term investments held by certain of its foreign subsidiaries in a tax efficient manner. Although Microchip believes its determinations with respect to the tax consequences of the Merger are reasonable, Microchip is regularly audited by the IRS and may be audited by other taxing authorities, and there can be no assurance as to the outcome of any such audit.

Microchip following the Merger will incur significant transaction and integration related costs in connection with the Merger.

Microchip expects to incur costs associated with integrating the operations of Atmel following the Closing. The amount of these costs could be material to the financial position and results of operations of Microchip following the Merger. A substantial amount of such expenses will be comprised of transaction costs related to the Merger, facilities and systems consolidation costs, and employee-related costs. Microchip will also incur fees and costs related to formulating integration plans and performing these activities. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset incremental transaction and other integration related costs in the near term.

Microchip may not have discovered undisclosed liabilities of Atmel.

Microchip’s due diligence review of Atmel may not have discovered undisclosed liabilities of Atmel. If Atmel has undisclosed liabilities, Microchip as a successor owner may be responsible for such undisclosed liabilities. Microchip has tried to control its exposure to undisclosed liabilities by obtaining certain protections under the Merger Agreement, including representations and warranties from Atmel regarding undisclosed liabilities, however, such representations and warranties expire by their terms on the completion of the Merger. There can

 

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be no assurance that such provisions in the Merger Agreement will protect Microchip against any undisclosed liabilities being discovered or provide an adequate remedy for any undisclosed liabilities that are discovered. Such undisclosed liabilities could have an adverse effect on the business and results of operations of Microchip and may adversely affect the value of Microchip common stock after the consummation of the Merger.

Atmel’s counterparties may acquire certain rights upon the Merger, which could negatively affect Microchip following the Merger.

Atmel is party to numerous contracts, agreements, licenses, permits, authorizations and other arrangements that contain provisions giving counterparties certain rights (including, in some cases, termination rights) in the event of an “assignment” of the agreement or a “change in control” of Atmel or its subsidiaries. The definitions of “assignment” and “change in control” vary from contract to contract and, in some cases, the “assignment” or “change in control” provisions may be implicated by the Merger. If an “assignment” or “change in control” occurs, a counterparty may be permitted to terminate its contract with Atmel.

Whether a counterparty would have cancellation rights in connection with the Merger depends upon the language and governing law of its agreement with Atmel. Whether a counterparty exercises any cancellation rights it has would depend on, among other factors, such counterparty’s views with respect to the financial strength and business reputation of Microchip following the Merger and prevailing market conditions. Atmel cannot presently predict the effects, if any, if the Merger is deemed to constitute a change in control under certain of its contracts and other arrangements, including the extent to which cancellation rights would be exercised, if at all, or the effect on Microchip’s financial condition, results of operations or cash flows following the Merger, but such effect could be material.

Uncertainties associated with the Merger may cause a loss of employees and may otherwise materially adversely affect the future business and operations of Microchip following the Merger.

Microchip’s success following the Merger will depend upon the ability of Microchip to retain senior management and key employees of Microchip and Atmel following the Merger. In some of the fields in which Microchip and Atmel operate, there are only a limited number of people in the job market who possess the requisite skills, and it may be increasingly difficult for Microchip following the Merger to hire personnel over time. Microchip following the Merger will operate in many geographic locations, including Arizona, Silicon Valley, Germany, the United Kingdom, the rest of continental Europe, and parts of Asia, where the labor markets, especially for engineers, are particularly competitive. Atmel has experienced difficulty in hiring and retaining sufficient numbers of qualified management, manufacturing, technical, engineering, marketing, sales and support personnel in parts of its business. Furthermore, certain unvested stock awards and benefits held by Atmel employees may vest in connection with the Merger, and Microchip following the Merger may need to offer new awards and benefits to increase retention.

Current and prospective employees of Microchip and Atmel may experience uncertainty about their roles with Microchip following the Merger. In addition, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Microchip following the Merger. The loss of services of certain senior management or key employees of Microchip and Atmel or the inability to hire new personnel with the requisite skills could restrict the ability of Microchip following to develop new products or enhance existing products in a timely manner, to sell products to customers or to manage the business of Microchip following the Merger effectively. Also, the business, financial condition and results of operations of Microchip following the Merger could be materially adversely affected by the loss of any of its key employees, by the failure of any key employee to perform in his or her current position, or by Microchip’s inability to attract and retain skilled employees, particularly engineers.

 

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Microchip following the Merger will have a more complex organizational structure, which could result in unfavorable tax or other consequences and could have an adverse effect on its net income and financial condition.

Microchip following the Merger will operate legal entities in many countries where it will conduct manufacturing, design and sales operations around the world. In some countries, it will maintain multiple entities for tax or other purposes. Changes in tax laws, regulations, and related interpretations in the countries in which it operates may adversely affect its results of operations. Microchip following the Merger will have many entities globally and may have unsettled intercompany balances between some of these entities that could result, if changes in law, regulations or related interpretations occur, in adverse tax or other consequences affecting its capital structure, intercompany interest rates and legal structure.

Future results of Microchip following the Merger may differ materially from the unaudited pro forma financial information included in this proxy statement/prospectus.

The future results of Microchip following the Merger may be materially different from those shown in the unaudited pro forma financial information presented in this proxy statement/prospectus that show only a combination of Microchip’s and Atmel’s historical results. Microchip expects to incur significant costs associated with completing the Merger and integrating the operations of Atmel, and the exact magnitude of these costs is not yet known. Furthermore, these costs may decrease the amount of capital that could be used by Microchip for other purposes.

The financial analyses and forecasts considered by Microchip, Atmel and Atmel’s financial advisor may not be realized.

While the financial projections utilized by Microchip, Atmel and Atmel’s financial advisor in connection with the Merger were prepared in good faith based on information available at the time of preparation, no assurances can be made regarding future events or that the assumptions made in preparing such projections will accurately reflect future conditions. There can be no assurance that the underlying assumptions or projected results will be realized, and actual results will likely differ, and may differ materially, from such projections, which could result in a material adverse effect on the business, financial condition, results of operations and prospects of Microchip following the Merger.

The business and operating results of Microchip could be harmed by the highly cyclical nature of the semiconductor industry.

Atmel and Microchip operate in the semiconductor industry. Historically, the semiconductor industry has been highly cyclical with recurring periods of diminished product demand. Significant downturns in the semiconductor industry are often experienced in connection with, or in anticipation of, excess manufacturing capacity worldwide, maturing product cycles and declines in general economic conditions. Even if demand for the products and solutions of Atmel and Microchip remains constant after the completion of the Merger, a slowdown in the semiconductor industry may create competitive pressures that can degrade pricing levels and reduce revenues of Microchip following the Merger. Any failure to expand in cycle upturns to meet customer demand and delivery requirements or contract in cycle downturns at a pace consistent with cycles in the industry could have an adverse effect on the business of Microchip following the Merger.

 

 

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Other Risk Factors of Microchip and Atmel

Microchip’s and Atmel’s businesses are and will be subject to the risks described above. In addition, Microchip and Atmel are, and will continue to be, subject to the risks described in Microchip’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015, and Atmel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as amended and as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 137 of this proxy statement/prospectus for the location of information incorporated by reference in this proxy statement/prospectus.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Microchip’s and Atmel’s current beliefs, expectations or intentions regarding future events. These statements include forward-looking statements both with respect to Microchip and Atmel and the semiconductor industry. Statements that are not historical facts, including statements that use terms such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “projects,” “seeks,” “may,” “should,” “continue,” “targets,” “estimate,” “aims” and “will” and that relate to Microchip’s and Atmel’s plans and objectives for future operations, are forward-looking statements. In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion of such statements in this proxy statement/prospectus should not be considered as a representation by Microchip, Atmel or any other person that such objectives or plans will be achieved.

Such forward-looking statements include, but are not limited to, statements about the benefits of the transaction involving Microchip and Atmel, including future financial and operating results, plans, objectives, expectations and intentions. All statements that address events or developments that Microchip and Atmel expect or anticipate will occur in the future—including statements relating to integrating our companies, synergies, earnings per share, and the expected timetable for completing the proposed transaction—are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although Microchip and Atmel believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. For example, these forward-looking statements could be affected by factors including, without limitation, risks associated with (1) the outcome of any legal proceedings that could be instituted against Atmel or its directors related to the discussions with Microchip, Atmel’s merger agreement with Dialog, the Merger Agreement or any unsolicited proposal; (2) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (3) the ability to obtain governmental and regulatory approvals of the Merger; (4) the possibility that the Merger does not close when expected or at all, or that Microchip or Atmel, in order to achieve governmental and regulatory approvals, may be required to modify aspects of the Merger or to accept conditions that could adversely affect Microchip following the Merger or the expected benefits of the Merger; (5) the possibility that other competing offers or acquisition proposals will be made; (6) the ability to realize the expected synergies or savings from the proposed Merger in the amounts or in the timeframe anticipated; (7) the potential harm to Atmel’s customer, supplier, employee and other relationships caused by the announcement of the Merger Agreement or the Closing; (8) the ability to integrate Atmel’s businesses into that of Microchip in a timely and cost-efficient manner; (9) Microchip’s ability to develop and market products containing the respective technologies of Atmel and Microchip in a timely and cost-effective manner; (10) Microchip’s ability to protect intellectual property rights; (11) litigation (including intellectual property litigation in which Microchip may be involved or in which customers of Microchip following the Merger may be involved), and the possible unfavorable results of legal proceedings; (12) dependence on key personnel; (13) the inability to realize the anticipated benefits of acquisitions and restructuring activities, including in connection with the proposed Merger, or other initiatives in a timely manner or at all; (14) the development of the markets for Atmel’s and Microchip’s products; (15) risks related to Microchip’s ability to successfully implement its acquisition strategy; (17) the inherent uncertainty associated with financial projections; (18) disruptions in the availability of raw materials; (19) compliance with U.S. and international laws and regulations by Microchip and its distributors; (20) the market price and volatility of Microchip common stock; (21) the cyclical nature of the semiconductor industry; (22) an economic downturn in the semiconductor market; (23) consolidation occurring within the semiconductor industry; (24) general global macroeconomic and geo-political conditions; (25) financial market conditions; (26) business interruptions, natural disasters or terrorist acts; (27) the failure to obtain the necessary vote of Atmel stockholders; (28) the amount of costs fees, expenses and charges related to the Merger; and those additional risks and factors discussed in reports filed with the SEC by Microchip and Atmel.

 

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Additional information concerning these and other risk factors is contained in Microchip’s and Atmel’s most recently filed Annual Reports on Form 10-K, as amended, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and other SEC filings. All subsequent written and oral forward-looking statements concerning Microchip, Atmel, the proposed transaction or other matters attributable to Microchip or Atmel or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. You are cautioned not to place undue reliance on these forward-looking statements, which speak only to the date they are made. Microchip and Atmel are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

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THE ATMEL SPECIAL MEETING

Date, Time and Location

The special meeting of Atmel stockholders will be held on [●], 2016 at 8:00 a.m., local time, at Atmel’s headquarters located at 1600 Technology Drive, San Jose, California 95110.

Purpose

At the special meeting, holders of Atmel common stock as of the Record Date will be asked to consider and approve the following proposals:

1. The Merger Proposal: The proposal to adopt the Merger Agreement, which provides for the merger of Merger Sub with and into Atmel, with Atmel surviving the merger as an indirect wholly owned subsidiary of Microchip.

2. The Compensation Proposal: The proposal to approve, on a non-binding, advisory basis, the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger.

3. The Adjournment Proposal: The proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal.

The approval of the Merger Proposal by Atmel stockholders is a condition to the obligations of Microchip and Atmel to complete the Merger. The approval, on a non-binding, advisory basis, of the Compensation Proposal is not a condition to the obligations of Microchip or Atmel to complete the Merger. The approval of the Adjournment Proposal also is not a condition to the obligation of Microchip or Atmel to complete the Merger.

Atmel will transact no other business at the special meeting, except for business properly brought before the special meeting or any adjournment or postponement.

Recommendation of the Atmel Board

The Atmel Board (1) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and are fair to, and in the best interest of, Atmel and its stockholders, (2) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, (3) recommended that Atmel stockholders adopt the Merger Agreement, and (4) directed that the Merger Agreement be submitted to the Atmel stockholders for adoption at the special meeting.

Accordingly, the Atmel Board recommends that Atmel stockholders vote:

 

  1. FOR” Proposal 1 to approve the Merger Proposal;
  2. FOR” Proposal 2 to approve the Compensation Proposal; and
  3. FOR” Proposal 3 to approve the Adjournment Proposal.

Record Date and Quorum

The Atmel Board has fixed the close of business on [●] as the Record Date. Stockholders of record as of the Record Date are entitled to notice of and to vote at the special meeting. As of the close of business on the Record Date, [●] shares of Atmel common stock were issued and outstanding and there were [●] holders of record of Atmel common stock. Each stockholder is entitled to one vote for each share of Atmel common stock held by such stockholder as of the Record Date.

Holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date must be present in person or represented by proxy at the special meeting in order to have the required quorum for

 

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transacting business. Abstentions are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business. Broker non-votes are not entitled to vote and, therefore, are not included for purposes of determining whether a quorum is present at the special meeting.

If you sell or transfer your shares of Atmel common stock after the Record Date but before the special meeting, you will retain your right to vote such shares of Atmel common stock at the special meeting unless you have transferred these rights via proxy to the acquirer of your shares. You are urged to vote by completing, signing, dating and mailing the enclosed proxy card in the envelope provided, or by Internet or telephone by following the instructions on the enclosed proxy card. If your shares of Atmel common stock are held in the name of your broker, bank or other nominee, you should submit voting instructions to your broker, bank or other nominee. Please refer to the voting instruction card included in these proxy materials by your broker, bank or other nominee.

Required Vote

The affirmative vote, in person or by proxy, of holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date is required to approve the Merger Proposal (Proposal 1). The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote on the matter is required to approve the Compensation Proposal (Proposal 2) and to approve the Adjournment Proposal (Proposal 3).

Votes may be cast in favor of, or against, each matter. You may also vote “ABSTAIN” with respect to any matter and such abstentions will be treated as shares present in person or represented by proxy and entitled to vote on that matter and thus will have the same effect as votes against the proposals.

If your shares of Atmel common stock are held by a broker, bank or other nominee, such broker, bank or other nominee is only entitled to vote your shares on routine matters, such as the ratification of the appointment of an independent registered public accounting firm, without instructions from you, the beneficial owner of those shares. Your broker, bank or other nominee is not entitled to vote shares held for a beneficial owner on non-routine matters, such as approval of the Merger Proposal, approval, on a non-binding, advisory basis, of the Compensation Proposal, and approval of the Adjournment Proposal. Consequently, if you do not give your broker, bank or other nominee specific instructions, your shares will not be voted at the special meeting. You are encouraged to provide instructions to your broker. This ensures your shares will be voted at the special meeting.

Failures to vote (whether by proxy or in person at the special meeting) and broker non-votes, if any, will have the same effect as a vote against the Merger Proposal. Failing to vote (whether by proxy or in person at the special meeting, if you do not attend the special meeting) and broker non-votes, if any, will have no effect on the outcome of the vote for the Compensation Proposal and the Adjournment Proposal, assuming a quorum is present. If you attend the special meeting and fail to vote, this will have the same effect as a vote against the Compensation Proposal and the Adjournment Proposal.

Share Ownership and Voting by Atmel Directors and Executive Officers

As of the Record Date, the directors and executive officers of Atmel held and are entitled to vote, in the aggregate, approximately [●]% of the aggregate voting power of the outstanding shares of Atmel common stock.

 

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Voting of Shares

For Stockholders of Record:

In addition to voting in person at the special meeting, if your shares of Atmel common stock are held in your name by Atmel’s transfer agent as a stockholder of record, you, as an Atmel stockholder, may submit a proxy as follows:

 

    By Internet. The web address and instructions for Internet proxy submission can be found on the enclosed proxy card. You will be required to provide your assigned control number located on the proxy card. Internet proxy submission via the web address indicated on the enclosed proxy card is available 24 hours a day. If you choose to submit your proxy by Internet, then you do not need to return the proxy card. To be valid, your Internet proxy must be received by 11:59 p.m. (U.S. Eastern Time) on the day preceding the special meeting.

 

    By Telephone. The toll-free number for telephone proxy submission can be found on the enclosed proxy card. You will be required to provide your assigned control number located on the proxy card. Telephone proxy submission is available 24 hours a day. If you choose to submit your proxy by telephone, then you do not need to return the proxy card. To be valid, your telephone proxy must be received by 11:59 p.m. (U.S. Eastern Time) on the day preceding the special meeting.

 

    By Mail. Mark the enclosed proxy card, sign and date it, and return it in the postage-paid envelope we have provided. To be valid, your proxy by mail must be received by 11:59 p.m. (U.S. Eastern Time) on the day preceding the special meeting.

Atmel requests that Atmel stockholders submit their proxies over the Internet, by telephone or by completing and signing the accompanying proxy and returning it to Atmel as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed (including proper proxy submission by Internet or telephone), the shares of Atmel common stock represented by it will be voted at the special meeting in accordance with the instructions contained on the proxy card.

If you sign and return your proxy or voting instruction card without indicating how to vote on any particular proposal, the Atmel common stock represented by your proxy will be voted “FOR” each proposal in accordance with the recommendation of the Atmel Board. Unless you check the box on your proxy card to withhold discretionary authority, the proxy holders may use their discretion to vote on the proposals relating to the special meeting.

If your shares of Atmel common stock are held in “street name” by a broker, bank or other nominee, you should check the voting form used by that firm to determine whether you may give voting instructions by telephone or the Internet and you should read the information in the section entitled “—Voting of Shares—For Beneficial Owners” below.

EVERY ATMEL STOCKHOLDER’S VOTE IS IMPORTANT. ACCORDINGLY, EACH ATMEL STOCKHOLDER SHOULD SUBMIT ITS PROXY VIA THE INTERNET OR BY TELEPHONE, OR SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD, WHETHER OR NOT THE ATMEL STOCKHOLDER PLANS TO ATTEND THE SPECIAL MEETING IN PERSON.

For Beneficial Owners:

If your shares of Atmel common stock are held in “street name” by a broker, bank or other nominee, you have the right to direct your broker, bank or other nominee on how to vote your shares of Atmel common stock. Your broker, bank or other nominee, as applicable, may establish an earlier deadline by which you must provide instructions to it for how to vote your shares of Atmel common stock. You should read carefully the materials provided to you by your broker, bank or other nominee. Because a beneficial owner is not the stockholder of

 

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record, you may not vote these shares of Atmel common stock at the special meeting unless you obtain a “legal proxy” from the broker, bank or other nominee that holds your shares of Atmel common stock giving you the right to vote such shares of Atmel common stock at the special meeting.

Revocation of Proxies

If you are a stockholder of record as of the Record Date, you may change your vote:

 

    by delivering to Atmel (Attention: Corporate Secretary, 1600 Technology Drive, San Jose, California 95110), prior to your shares being voted at the special meeting, a later dated written notice of revocation or a later dated duly executed proxy card, or

 

    by attending the special meeting and voting in person (although attendance at the special meeting will not, by itself, revoke a proxy).

A stockholder of record who has voted on the Internet or by telephone may also change his or her vote by subsequently making a timely and valid Internet or telephone vote.

If you are a beneficial owner of shares held in “street name” by a broker, bank or other nominee, you may revoke your proxy and vote your shares in person at the special meeting only in accordance with applicable rules and procedures as employed by such broker, bank or other nominee. If your shares are held in an account at a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

Solicitation of Proxies; Costs of Solicitation

Your proxy is being solicited by the Atmel Board on behalf of Atmel. Atmel will bear the entire cost of proxy solicitation, including preparation, assembly, printing and mailing of the notice of special meeting, proxy card, this proxy statement/prospectus and any additional materials furnished to Atmel stockholders. Copies of these materials will be furnished to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others to forward to those beneficial owners. In addition, Atmel may reimburse the costs of forwarding these materials to those beneficial owners.

Solicitation of proxies by mail may be supplemented by one or more of telephone, email, facsimile, or personal solicitation by Atmel’s directors, officers, or regular employees. No additional compensation will be paid for such services.

Atmel has engaged Innisfree M&A Incorporated to aid in the solicitation of proxies from brokers, bank nominees and other institutional owners for approximately $25,000, plus reimbursement of related expenses.

Tabulation of Votes

All votes will be tabulated by a representative of Broadridge, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. A representative of Atmel will act as the inspector of election appointed for the special meeting.

Adjournments and Postponements

In addition to the Merger Proposal and the Compensation Proposal, Atmel stockholders are being asked to approve the Adjournment Proposal, which will give the Atmel Board authority to adjourn the special meeting one or more times, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal at the time of the special meeting.

 

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If this proposal is approved, the special meeting could be adjourned to any date. If the special meeting is adjourned, Atmel stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the Merger Proposal but do not indicate a choice on the Adjournment Proposal, your shares of Atmel common stock will be voted “FOR” the Adjournment Proposal.

If a quorum is not present or represented at the special meeting, then either (1) the chairman of the meeting or (2) the Atmel stockholders entitled to vote at the special meeting, present in person or represented by proxy, shall have power to adjourn the meeting. Whether or not a quorum is present at the special meeting, the chairman of the meeting shall have power to adjourn the special meeting from time to time to another time or place or means of remote communications, without notice other than announcement at the special meeting of the time and place, if any, and the means of remote communications, if any, by which Atmel stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting. When a special meeting is adjourned to another time and place, unless the Atmel Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, are announced at the special meeting at which the adjournment is taken. At the adjourned meeting, Atmel may transact any business that might have been transacted at the original special meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Atmel stockholder of record entitled to vote at the meeting.

The chairman of the special meeting may adjourn the special meeting to, among other things, solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal, allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure to be disseminated to and reviewed by Atmel stockholders prior to the special meeting, or otherwise with the consent, or upon the request, of Microchip.

The chairman of the special meeting may determine to adjourn the special meeting even if the Adjournment Proposal is not approved by Atmel stockholders.

Additionally, the Atmel Board, acting pursuant to a resolution adopted by a majority of the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships, has the right to cancel, postpone or reschedule a special meeting of the stockholders at any time, before or after the notice for such meeting has been sent to the stockholders.

Attending the Special Meeting

Only Atmel stockholders of record as of the close of business on the Record Date or their duly appointed proxies may attend the special meeting, or if your shares of Atmel common stock are held in “street name” by a broker, bank or other nominee and you bring evidence of beneficial ownership of those shares on the Record Date, such as a copy of your most recent account statement or similar evidence of ownership of Atmel common stock as of the Record Date, you may attend the special meeting. If your shares of Atmel common stock are held in “street name” by a broker, bank or other nominee and you wish to vote at the special meeting, you must also bring a proxy from the record holder (your broker, bank or other nominee) of the shares of Atmel common stock authorizing you to vote at the special meeting. All stockholders should bring photo identification (a driver’s license or passport is preferred), as you will also be asked to provide photo identification at the registration desk on the day of the special meeting or any adjournment or postponement of the special meeting. Everyone who attends the special meeting must abide by the rules for the conduct of the meeting. These rules will be printed on the meeting agenda. Even if you plan to attend the special meeting, we encourage you to vote by telephone, Internet or mail so your vote will be counted if you later decide not to (or are otherwise unable to) attend the special meeting. No cameras, recording equipment, other electronic devices, large bags or packages will be permitted in the special meeting. Stockholders will be admitted to the meeting room starting at 7:00 a.m., local time, and admission will be on a first-come, first-served basis.

 

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Assistance

If you need assistance in completing your proxy card, have questions about the Merger, the special meeting, or the proposals to be considered at the special meeting, need additional copies of this document or need to obtain proxy cards or other information related to the proxy solicitation, please contact Atmel’s proxy solicitor, Innisfree M&A Incorporated, at the following address and telephone number:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders call toll-free: (888) 750-5834

Banks and brokers call collect: (212) 750-5833

 

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PROPOSAL 1: THE MERGER PROPOSAL

As discussed throughout this proxy statement/prospectus, Atmel is asking its stockholders to adopt the Merger Agreement. Pursuant to the Merger Agreement, Microchip will acquire Atmel in the Merger. Merger Sub will merge with and into Atmel, with Atmel as the surviving corporation. Atmel will be an indirect wholly owned subsidiary of Microchip and the Atmel common stock will be delisted from NASDAQ, deregistered under the Exchange Act and cease to be publicly traded.

As described in further detail in the sections entitled “Questions and Answers about the Merger and the Special Meeting” beginning on page v of this proxy statement/prospectus, “Summary” beginning on page 1 of this proxy statement/prospectus, “The Merger” beginning on page 53 of this proxy statement/prospectus and “The Merger Agreement” beginning on page 99 of this proxy statement/prospectus, the Atmel Board has approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement. The Merger is subject to the satisfaction of the conditions set forth in the Merger Agreement, including the adoption of the Merger Agreement by the stockholders of Atmel at the special meeting. Accordingly, the approval of the Merger Proposal by Atmel stockholders is a condition to the obligations of Microchip and Atmel to complete the Merger.

Required Vote

The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Atmel common stock entitled to vote as of the Record Date on the Merger Proposal at the special meeting is required to approve the Merger Proposal.

Recommendation of the Atmel Board

The Atmel Board recommends that Atmel stockholders vote “FOR” the Merger Proposal.

 

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PROPOSAL 2: THE COMPENSATION PROPOSAL

Atmel is providing its stockholders with the opportunity to cast a vote, on a non-binding, advisory basis, to approve the compensation payments that will or may be made to Atmel’s named executive officers in connection with the Merger as disclosed in the table (and related narrative disclosure) titled “The Merger—Interests of Atmel’s Directors and Executive Officers in the Merger—Quantification of Change in Control and Termination Payments and Benefits to Atmel’s Executive Officers” beginning on page 91 of this proxy statement/prospectus, as required by Section 14A of the Exchange Act.

Through this proposal, Atmel is asking its stockholders to indicate their approval, on a non-binding, advisory basis, of the compensation and change of control payments which Atmel’s named executive officers will or may be eligible to receive in connection with the Merger as indicated in the table referred to above. The plans and arrangements under which these compensation payments may be made are part of Atmel’s compensation program for its named executive officers or are required by the Merger Agreement.

You should review carefully the information under the section entitled “The Merger—Interests of Atmel’s Directors and Executive Officers in the Merger—Quantification of Change in Control and Termination Payments and Benefits to Atmel’s Executive Officers” beginning on page 91 of this proxy statement/prospectus.

The Atmel Board recommends that Atmel stockholders approve the following resolution:

“RESOLVED, that the stockholders of Atmel approve, solely on an advisory, non-binding basis, the compensation payments which will or may be made to Atmel’s named executive officers in connection with the Merger, as disclosed pursuant to Item 402(t) of Regulation S-K, including in the table titled “The Merger—Interests of Atmel’s Directors and Executive Officers in the Merger—Quantification of Change in Control and Termination Payments and Benefits to Atmel’s Executive Officers” beginning on page 91 of this proxy statement/prospectus.”

The vote on the Compensation Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and abstain or vote not to approve the Compensation Proposal. Because the vote on the Compensation Proposal is advisory only, it will not be binding on either Atmel or Microchip. Accordingly, if the Merger Proposal is approved and the Merger is completed, the compensation payments that are contractually required to be made to Atmel’s named executive officers will be made, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory vote of Atmel’s stockholders.

Required Vote

The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote at the special meeting is required to approve, on a non-binding, advisory basis, the Compensation Proposal.

Recommendation of the Atmel Board

The Atmel Board recommends that Atmel stockholders vote “FOR” the Compensation Proposal.

 

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PROPOSAL 3: THE ADJOURNMENT PROPOSAL

Atmel stockholders are being asked to approve a proposal that will give the Atmel Board authority to adjourn the special meeting one or more times, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Merger Proposal at the time of the special meeting.

If this proposal is approved, the special meeting could be adjourned to any date. If the special meeting is adjourned, Atmel stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the Merger Proposal but do not indicate a choice on the Adjournment Proposal, your shares of Atmel common stock will be voted “FOR” the Adjournment Proposal.

If a quorum is not present or represented at the special meeting, then either (1) the chairman of the meeting or (2) the Atmel stockholders entitled to vote at the special meeting, present in person or represented by proxy, shall have power to adjourn the meeting. Whether or not a quorum is present at the special meeting, the chairman of the meeting shall have power to adjourn the special meeting from time to time to another time or place or means of remote communications, without notice other than announcement at the special meeting of the time and place, if any, and the means of remote communications, if any, by which Atmel stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting. When a special meeting is adjourned to another time and place, unless the Atmel Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, are announced at the special meeting at which the adjournment is taken. At the adjourned meeting, Atmel may transact any business that might have been transacted at the original special meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Atmel stockholder of record entitled to vote at the meeting.

The chairman of the special meeting may adjourn the special meeting to, among other things, solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal, allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure to be disseminated to and reviewed by Atmel stockholders prior to the special meeting, or otherwise with the consent, or upon the request, of Microchip.

The chairman of the special meeting may determine to adjourn the special meeting even if the Adjournment Proposal is not approved by Atmel stockholders.

Additionally, the Atmel Board, acting pursuant to a resolution adopted by a majority of the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships, has the right to cancel, postpone or reschedule a special meeting of the stockholders at any time, before or after the notice for such meeting has been sent to the stockholders.

Required Vote

The affirmative vote, in person or by proxy, of the holders of a majority of the outstanding shares of Atmel common stock present in person or represented by proxy at the special meeting and entitled to vote on the Adjournment Proposal at the special meeting is required to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Merger Proposal.

Recommendation of the Atmel Board

The Atmel Board recommends that Atmel stockholders vote “FOR” the Adjournment Proposal.

 

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THE MERGER

The following is a discussion of the Merger and the material terms of the Merger Agreement between Microchip and Atmel. You are urged to read the Merger Agreement carefully and in its entirety, a copy of which is attached as Annex A to this proxy statement/prospectus and incorporated by reference herein.

Effects of the Merger

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, Merger Sub will be merged with and into Atmel, with Atmel surviving the Merger as an indirect wholly owned subsidiary of Microchip.

In the Merger, each outstanding share of Atmel common stock (other than dissenting shares, shares owned by Microchip or Atmel, which shares will be cancelled, or shares owned by any subsidiary of either Microchip or Atmel, which shares will be converted into the number of shares of common stock of the surviving corporation such that each such subsidiary owns the same percentage of the outstanding capital stock of the surviving corporation immediately following the Effective Time as such subsidiary owned in Atmel immediately prior to the Effective Time) will be converted into the right to receive the Merger Consideration consisting of cash and a fraction of a share of Microchip common stock (with cash being substituted for Microchip common stock to the extent that the aggregate number of shares of Microchip stock issued in exchange for Atmel stock would exceed 13.0 million shares). If the aggregate consideration to be paid to any holder of Atmel common stock would result in such holder receiving a fractional share of Microchip common stock, cash will be paid in lieu of such fractional share. Microchip stockholders will continue to hold their existing shares of Microchip common stock.

Based on 421,310,142 shares of Atmel common stock issued and outstanding as of December 31, 2015, and 203,498,524 shares of Microchip common stock issued and outstanding as of December 31, 2015, and assuming a ten-trading day average closing price of $42.80 (calculated based on the prices from January 15, 2016, the last trading date before the announcement of the Merger Agreement), following the Merger, the stockholders of Atmel on the announcement date of the Merger would collectively own approximately 11,321,307 shares of Microchip common stock, or 5.27% of the number of shares of Microchip common stock issued and outstanding, after giving effect to the issuance of the 11,321,307 shares of Microchip common stock issued as part of the Merger Consideration. The number and percentage of Microchip common stock issued and outstanding that stockholders of Atmel would collectively own following the Merger ultimately depends on the ten-trading day average closing price of Microchip common stock ending on the trading date that is immediately prior to the Closing Date. Microchip will not issue more than 13.0 million shares of Microchip common stock in the Merger. To the extent that the number of shares of Microchip common stock issuable in the Merger to stockholders of Atmel exceeds 13.0 million shares, the Cash Consideration issuable per share of Atmel common stock will be increased such that the value of combined Cash Consideration and Stock Consideration issuable to stockholders of Atmel remains the same as if there were no restriction on the number of shares of Microchip common stock issuable in the Merger. In such an event, based on 203,498,524 shares of Microchip common stock issued and outstanding as of December 31, 2015, following the Merger, the stockholders of Atmel would be issued 13,000,000 shares of Microchip common stock, or 6.0% of the number of shares of Microchip common stock issued and outstanding (following such issuance ).

Background of the Merger

Atmel operates in the semiconductor industry. The semiconductor industry has typically been cyclical and, at different times, has experienced excess product supply, price erosion, rapid technological change, short product life cycles, increased capital requirements and changing competition. Recently, the semiconductor industry has experienced significant and accelerating merger and acquisition activity, resulting in industry consolidation that is expected to offer enhanced scale and improved leverage to larger competitors.

The Atmel Board regularly meets to evaluate Atmel’s strategic direction, performance and business plans. In connection with that evaluation process, the Atmel Board generally considers: (1) Atmel’s historical and

 

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projected financial and operational performance; (2) product development initiatives, including the investments that could be required to develop those products and to maintain Atmel’s competitive position; (3) evolving market opportunities for Atmel’s products; (4) the customer base that Atmel serves and the growth expectations for that customer base; (5) the competitive landscape in which Atmel operates, including issues related to scale; (6) the maturity of the semiconductor industry and ongoing consolidation activity within the sector; and (7) other matters that may affect future corporate growth and profitability.

In pursuing its objective of enhancing stockholder value, and as part of its ongoing review of strategic opportunities available to Atmel, the Atmel Board periodically considers opportunities for a variety of strategic transactions that might enhance stockholder value, including potential acquisitions, divestitures, business combinations and other strategic alliances.

On March 26, 2015, the Atmel Board met to review, among other things, developments within the semiconductor industry. At that meeting, representatives of Qatalyst Partners, at the invitation of the Atmel Board, provided an overview of merger and acquisition activity and trends within the semiconductor industry.

In a letter dated May 6, 2015, Steven Laub, Atmel’s President and Chief Executive Officer, informed the Atmel Board that he intended to retire as an officer and director of Atmel, effective August 31, 2015. Following the close of The Nasdaq Stock Market on the same day, Atmel issued a press release and filed a Current Report on Form 8-K announcing Mr. Laub’s intention to retire. At the close of trading on May 6, 2015, the price of Atmel’s common stock was $7.54 per share.

Between May 7 and July 1, 2015, following the public announcement of Mr. Laub’s expected retirement, Atmel received unsolicited inquiries from nine parties seeking to initiate possible strategic discussions. Each of these inquiries was a general solicitation of Atmel’s interest in pursuing a strategic transaction, and none of the parties making these inquiries proposed specific transaction terms or conditions.

On May 8 and May 12, 2015, the independent directors of the Atmel Board (the “Independent Directors”), which did not include Mr. Laub or Tsung-Ching Wu, Atmel’s Executive Vice President, met to discuss the possible effects on Atmel of Mr. Laub’s expected retirement. The Independent Directors also discussed the unsolicited inquiries received to date by Atmel following Atmel’s announcement of Mr. Laub’s pending retirement. At the May 8 meeting, a representative of Atmel’s outside counsel advised the Independent Directors concerning their fiduciary duties. During each of the May 8 and May 12 meetings, the Independent Directors discussed the need to engage an executive search firm to assist the Atmel Board in recruiting a new Chief Executive Officer. The Independent Directors determined to request that Atmel management update Atmel’s three-year financial plan for the Atmel Board. At the conclusion of these meetings, the Independent Directors recommended that the Atmel Board commence a strategic review process in parallel with the executive recruitment effort that the Independent Directors had initiated. The Independent Directors also recommended that the Atmel Board interview financial advisory firms to assist with that strategic process. Consistent with those recommendations, the Independent Directors determined not to undertake discussions with any interested parties until after the Atmel Board had engaged a financial advisory firm.

On May 18, 2015, the Atmel Board, by unanimous written consent, established a special committee (the “Search Committee”) consisting solely of all of the Independent Directors to conduct the search for a new Chief Executive Officer.

On May 20, 2015, Atmel engaged Spencer Stuart to manage the search for a new Chief Executive Officer and to advise and assist the Search Committee in its deliberations. After the formation of the Search Committee, from May 2015 through August 2015, the Search Committee met on twelve separate occasions to interview potential candidates, to discuss the members’ evaluations of candidates, to consider the candidates’ strategic and business perspectives on Atmel, to obtain guidance and perspective from representatives of Spencer Stuart regarding the process and the strengths and weaknesses of each candidate interviewed, and to consider the potential effects on Atmel of appointing a new Chief Executive Officer.

 

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On May 29, 2015, Atmel engaged Qatalyst Partners to act as Atmel’s financial advisor in connection with the proposed strategic review process.

On June 8, 2015, Reuters published an article stating that Atmel was exploring strategic alternatives, including a possible sale of the company. The closing price of Atmel’s common stock was $9.42 per share on June 5, 2015, the last full trading day prior to the date of the Reuters article.

Later that day, the Atmel Board met to discuss, with representatives of Qatalyst Partners and Atmel management, a proposed process and timeline for the strategic review process. The discussions addressed possible outreach to potential acquirors and strategic partners. Atmel management offered its perspective on the matter to the Atmel Board. The Atmel Board, together with representatives of Qatalyst Partners and Atmel management, discussed industry dynamics, informed by the extensive experience of each Atmel Board member in the semiconductor industry. The Atmel Board authorized Qatalyst Partners, on behalf of Atmel, to contact 14 parties to assess their interest in pursuing an acquisition of, or a strategic partnership with, Atmel. These parties were selected based upon their business models, financial performance and condition, information generally available regarding their product and technology roadmaps, potential revenue and cost synergies that might be available with Atmel, their ability to complete a transaction and discussions with representatives of Qatalyst Partners and Atmel management.

On June 8, 2015, Atmel formally engaged Jones Day to act as transaction counsel in connection with Atmel’s strategic review process.

On June 9, 2015, representatives of Qatalyst Partners commenced its initial outreach efforts to the 14 parties previously discussed with the Atmel Board that might be potentially interested in pursuing an acquisition of, or a strategic partnership with, Atmel.

On June 15, 2015, the Atmel Board met to receive an update from Qatalyst Partners and Atmel management on the outreach efforts and the strategic review process. At that meeting, the Atmel Board discussed, with representatives of Qatalyst Partners and Atmel management, expanding the process to include additional potential acquirors and strategic partners. After considering the substantial level of the initial interest and the possibility of greater interest in a potential transaction with Atmel, the Atmel Board directed representatives of Qatalyst Partners to contact additional parties to assess their interest in pursuing an acquisition of, or a strategic partnership with, Atmel.

Between June 15 and July 1, 2015, Qatalyst Partners contacted four additional parties and David Sugishita, Atmel’s Chairman, contacted two parties. In total, 20 parties were contacted during the strategic review process, including the nine parties that contacted Atmel on an unsolicited basis.

Atmel entered into non-disclosure agreements with 14 of these interested parties, including Microchip. Atmel provided each with access to legal, financial, commercial and operational information, including access through an electronic data room. As discussed below, Microchip was also granted access to the electronic data room after it executed a non-disclosure agreement with Atmel on July 29, 2015.

On June 17, 2015, the Atmel Board met to discuss a three-year financial plan for the years 2015, 2016 and 2017, prepared by Atmel management. At that meeting, Steve Skaggs, Atmel’s Senior Vice President and Chief Financial Officer, reviewed the three-year financial plan. Following Mr. Skaggs’ presentation, other members of Atmel management, including Mr. Laub, discussed Atmel’s business prospects for the same three-year period.

On June 22, 2015, the Atmel Board met to receive an update from representatives of Qatalyst Partners and Atmel management. At that meeting, the Atmel Board discussed and reviewed presentations prepared by Atmel management for use in discussions and due diligence meetings with interested parties. The Atmel Board authorized Atmel management to use the presentations reviewed with the Atmel Board to conduct meetings with interested parties.

 

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Between June 23 and July 20, 2015, members of Atmel management conducted separate management presentations for 13 of the 14 interested parties that had received access to due diligence information, including access through an electronic data room. Each of these parties was provided a copy of the management presentation, which contained information regarding Atmel’s business and results of operations and potential transaction synergies. During this period and thereafter, Atmel management responded to due diligence inquiries and engaged, with the assistance of representatives of Qatalyst Partners, in numerous discussions and meetings with these parties concerning their interest in pursuing an acquisition of, or a strategic partnership with, Atmel. Microchip did not participate in the management presentations during this period because it had not yet entered into a non-disclosure agreement with Atmel.

On June 24, 2015, the Independent Directors met to review and discuss the ongoing strategic review process and Atmel’s three-year financial plan provided to the Atmel Board at the June 17 board meeting.

On June 29, 2015, the Atmel Board met to receive an update from representatives of Qatalyst Partners. Representatives of Qatalyst Partners discussed with the Atmel Board the management meetings that had been completed by that date with interested parties and additional meetings that had been scheduled with other interested parties. Representatives of Qatalyst Partners discussed Atmel’s financial performance, including estimates of Atmel’s future financial performance, as prepared by Atmel management and as publicly reported by stock analysts. Representatives of Qatalyst Partners also reviewed, among other things, Atmel’s historical stock price performance.

On June 30, 2015, Mr. Steve Sanghi, the President & CEO of Microchip, requested due diligence information from Atmel, subject to Microchip’s execution of a non-disclosure agreement.

On July 1, 2015, the Search Committee met to discuss the status of Atmel’s search for a new Chief Executive Officer. During that meeting, the Independent Directors also discussed the presentation made by Qatalyst Partners to the Atmel Board during the June 29 board meeting, including Atmel’s prospects if it remained an independent company.

On July 2, 2015, representatives of Qatalyst Partners and representatives of Microchip management conducted a teleconference to discuss the scope of possible due diligence that would be provided to Microchip, assuming execution of a non-disclosure agreement.

On July 6, 2015, the Atmel Board met to discuss the strategic review process. At that meeting, representatives of Qatalyst Partners provided an update on the process and the status of discussions with interested parties. Representatives of Qatalyst Partners also reviewed, with the Atmel Board, a proposed form of initial bid process letter that it requested permission to distribute to interested parties. The Atmel Board authorized Qatalyst Partners to distribute the bid process letter to interested parties.

Between July 6 and July 23, 2015, representatives of Qatalyst Partners distributed the bid process letter to 13 interested parties that, at that point in the process, had signed non-disclosure agreements. The bid process letter requested that interested parties submit preliminary, non-binding indications of interest to representatives of Qatalyst Partners on or before July 21, 2015. That deadline was later extended from July 21 to July 31, 2015 so interested parties could undertake a more complete due diligence review of Atmel prior to submitting proposals. The bid process letter was not distributed to Microchip because Microchip had not yet entered into a non-disclosure agreement.

On July 13, 2015, the Atmel Board met to discuss the status of the strategic review process. At that meeting, representatives of Qatalyst Partners provided an update regarding the process and offered further commentary regarding management meetings that had been completed with some interested parties and additional meetings that had been scheduled with other interested parties. During that meeting, Mr. Skaggs also reviewed Atmel’s preliminary results for the quarter ended June 30, 2015, and Mr. Laub and other members of Atmel management

 

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updated the Atmel Board on the performance and outlook for Atmel’s business. At that meeting, the Atmel Board, as noted in the preceding paragraph, extended the deadline set forth in the bid process letter for interested parties to submit preliminary indications of interest from July 21, 2015 to July 31, 2015.

On July 20, 2015, the Atmel Board met to discuss the status of the strategic review process. At that meeting, representatives of Qatalyst Partners updated the Atmel Board on discussions with interested parties to date, noted that they had conducted a teleconference with representatives of Microchip’s financial advisor, and discussed potential meetings with additional interested parties.

On July 23, 2015, Mr. Sugishita met with Mr. Sanghi to discuss the status of the non-disclosure agreement between the companies and the strategic review process.

Between July 22 and July 31, 2015, seven of the 13 interested parties that had received a bid process letter informed either representatives of Qatalyst Partners or Atmel management that they would not submit a non-binding indication of interest relating to an acquisition of, or a strategic partnership with, Atmel, and withdrew from Atmel’s strategic review process. Due diligence access for each of these seven parties was terminated.

On July 27, 2015, the Atmel Board met to review Atmel’s financial results for the quarter ended June 30, 2015 and to receive an update on the strategic review process. At that meeting, representatives of Qatalyst Partners offered further updates on the strategic review process, Atmel’s recent stock performance and the status of discussions with interested parties. Mr. Skaggs provided the Atmel Board with a financial review of each Atmel business unit, and Mr. Laub and other members of Atmel management updated the Atmel Board on the outlook for Atmel’s business.

On July 28, 2015, Mr. Sanghi contacted Mr. Sugishita to confirm Microchip’s interest in participating in Atmel’s strategic review process.

On July 29, 2015, Microchip executed a non-disclosure agreement with Atmel.

Between July 31 and August 3, 2015, representatives of Qatalyst Partners, on behalf of Atmel, received preliminary, non-binding indications of interest from the six remaining interested parties that had received a bid process letter, including Dialog and five other interested parties which we refer to as Company A, Company B, Company C, Company D and Company E. The financial terms of each non-binding, preliminary proposal were as follows:

 

    Dialog offered $9.75 per Atmel share, with $5.56 of the consideration payable in Dialog equity (through a fixed exchange ratio) and $4.19 payable in cash, representing an implied premium of 20% to Atmel’s stock price at the close of trading on August 4, 2015 and 29% to Atmel’s stock price on the close of trading on May 6, 2015 (the last trading day prior to the public announcement of Mr. Laub’s expected retirement).

 

    Company A offered $10.50 per Atmel share payable in cash, representing a premium of 29% to Atmel’s stock price at the close of trading on August 4, 2015 and 39% to Atmel’s stock price on the close of trading on May 6, 2015.

 

    Company B offered $10.00 per Atmel share payable in cash, representing a premium of 23% to Atmel’s stock price at the close of trading on August 4, 2015 and 33% to Atmel’s stock price on the close of trading on May 6, 2015.

 

    Company C offered $9.00 per Atmel share, with $4.84 of the consideration payable in Company C stock (through a fixed exchange ratio) and $4.16 payable in cash, representing an implied premium of 11% to Atmel’s stock price at the close of trading on August 4, 2015 and 19% to Atmel’s stock price on the close of trading on May 6, 2015. Company C’s proposal included a form of draft merger agreement.

 

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    Company D offered $10.50 per Atmel share, with $5.75 of the consideration payable in Company D stock (through a fixed exchange ratio) and $4.75 payable in cash, representing an implied premium of 29% to Atmel’s stock price at the close of trading on August 4, 2015 and 39% premium to Atmel’s stock price on the close of trading on May 6, 2015.

 

    Company E proposed a merger transaction that would result in Company E’s shareholders owning a 51% interest in the combined company, Atmel stockholders owning a 49% interest in the combined company, with Atmel’s stockholders receiving a cash distribution equal to the difference between the market capitalizations of the two companies, on a date to be determined, and the targeted ownership ratio.

On August 2, 2015, Mr. Sanghi contacted Mr. Sugishita to discuss due diligence matters. During this conversation, Mr. Sanghi indicated that Microchip intended to submit a preliminary, non-binding indication of interest to acquire Atmel.

On August 3, 2015, the Atmel Board met to discuss the preliminary, non-binding indications of interest. Mr. Sugishita informed the Atmel Board that Microchip also intended to submit a preliminary, non-binding indication of interest. Representatives of Qatalyst Partners preliminarily reviewed each indication of interest that had been received, and noted that the indications of interest would be discussed in detail with the Atmel Board at its meeting on August 5, 2015.

On August 5, 2015, the Atmel Board met to review and discuss the six preliminary, non-binding indications of interest. Prior to commencing a discussion of the indications of interest, representatives of Jones Day reviewed for the Atmel Board its fiduciary duties within the context of the strategic review process and, in particular, as it considered the proposals received. At the request of the Atmel Board, members of Atmel management, individually and collectively, offered the Atmel Board their perspectives on management meetings held with each interested party that had submitted a proposal, and responded to questions raised by the Atmel Board. After discussions with members of Atmel management concluded, representatives of Qatalyst Partners then reviewed for the Atmel Board each of the preliminary, non-binding indications of interest (including the financial condition and business performance of the interested parties). Representatives of Qatalyst Partners and Jones Day addressed the required regulatory approvals and potential closing timelines as indicated with each proposal. The Atmel Board then discussed possible implications of Atmel remaining as an independent company. Following these reviews and discussions, representatives of Qatalyst Partners, Atmel management and the Atmel Board discussed the proposal received from Company E. After further consideration, the Atmel Board determined to eliminate Company E from the strategic review process because its proposal was deemed the least attractive, there was no discernible strategic fit between Atmel and Company E, and the potential synergies from the combination were more limited than those with other interested parties. Following further discussion, the Atmel Board determined that it would be in the best interests of Atmel and its stockholders to continue exploring the possibility of a strategic transaction with the remaining interested parties. The Atmel Board directed Atmel management to work with representatives of Qatalyst Partners and Jones Day to facilitate a second phase of the strategic review process with Dialog, Company A, Company B, Company C (on the basis described in the next succeeding paragraph), Company D, and, if Microchip submitted an acceptable preliminary indication of interest, Microchip. The Atmel Board also directed representatives of Qatalyst Partners to seek enhancements to the terms of the proposals submitted by each of the interested parties.

On August 5, 2015, after the Atmel Board met, representatives of Qatalyst Partners informed Company E that the Atmel Board decided not to proceed with Company E’s proposal. Representatives of Qatalyst Partners informed Company C that the Atmel Board had conditionally invited Company C to participate in a second phase of the strategic review process, but that the financial terms of its proposal were significantly less attractive than the other interested parties and that its proposal would need to be enhanced if it expected to remain a participant in the process.

 

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Between August 5 and August 6, 2015, representatives of Qatalyst Partners contacted each of Dialog, Company A, Company B and Company D to inform them that they had been invited to participate in a second phase of the strategic review process. Representatives of Qatalyst Partners informed each party that it should seek to enhance the terms of its proposal if it expected to remain a participant in the process.

On August 10, 2015, the Atmel Board met to discuss the strategic review process. At that meeting, representatives of Qatalyst Partners provided the Atmel Board with an update on the process, and reported that Qatalyst Partners had informed each of Dialog, Company A, Company B, Company C and Company D that the Atmel Board determined to invite them to participate in the second phase of the process. Atmel management, including Messrs. Laub and Skaggs, provided the Atmel Board with a financial update for the years 2015, 2016 and 2017, and discussed the performance of, and outlook for, Atmel’s business. The Atmel Board then instructed Atmel management to provide the updated financial projections, which reflected downward adjustments as a result of Atmel’s financial results for the quarter ended June 30, 2015, to representatives of Qatalyst Partners and the remaining interested parties.

On August 11, 2015, representatives of Qatalyst Partners, on behalf of Atmel, received a revised proposal with an increased offer price from Company C. Company C’s revised proposal provided for $10.30 per Atmel share, with $4.69 of the consideration payable in Company C stock (through a fixed exchange ratio) and $5.61 payable in cash, representing a premium of 26% to Atmel’s stock price at the close of trading on August 10, 2015 and 37% premium to Atmel’s stock price on the close of trading on May 6, 2015.

Mr. Sanghi also informed Mr. Sugishita on August 11, 2015 that Microchip would submit a preliminary, non-binding indication of interest on August 14, 2015.

On August 14, 2015, Mr. Sanghi delivered Microchip’s preliminary, non-binding indication of interest to Mr. Sugishita. Microchip proposed $9.00 per Atmel share payable in cash, representing a premium of 15% to Atmel’s stock price at the close of trading on August 13, 2015 and 19% premium to Atmel’s stock price on the close of trading on May 6, 2015.

On August 17, 2015, the Atmel Board met to discuss the strategic review process. At that meeting, representatives of Qatalyst Partners updated the Atmel Board on its discussions with the interested parties. Representatives of Qatalyst Partners reviewed the preliminary, non-binding indication of interest submitted by Microchip, and noted that Microchip’s offer price was materially lower than the proposals received from other interested parties. After further discussion, representatives of Qatalyst Partners reviewed a proposed form of final bid process letter that requested each interested party to submit “best and final” offers on or before September 8, 2015. Representatives of Jones Day reviewed proposed forms of merger agreement that would be distributed to interested parties with the final bid process letter. The Atmel Board instructed Atmel management to proceed with the second phase of the strategic review process, which included Dialog, Company A, Company B, Company C and Company D. The Atmel Board also determined to include Microchip in the second phase of the process, if Microchip expressed a willingness to increase its offer price.

On August 17, 2015, Mr. Sugishita informed Mr. Sanghi that Microchip’s offer price was materially lower than the proposals received from other bidders. Mr. Sanghi informed Mr. Sugishita that Microchip’s proposal represented its best and final offer and would not be modified.

On August 18, 2015, representatives of Qatalyst Partners distributed to each of Dialog, Company A, Company B, Company C and Company D a final bid package that included the final bid process letter and form of merger agreement. The final bid process letter instructed each interested party to submit its “best and final” offer on or before September 8, 2015. Based on Mr. Sanghi’s representation that Microchip would not increase the value of its proposal, Microchip did not receive the final bid package.

 

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Between August 18 and September 19, 2015, Atmel and Qatalyst Partners held over 50 meetings and discussions with the five interested parties that received the final bid process letter. Atmel also continued to provide those parties with access to legal, financial, commercial and operational information, through an electronic data room.

On August 20, 2015, the Atmel Board (with the exception of Mr. Laub) met to discuss a possible extension of Mr. Laub’s retirement date. The Atmel Board discussed the potential effect of appointing a new Chief Executive Officer (after August 31, 2015) on Atmel’s strategic review process and other matters. The Atmel Board then authorized Mr. Sugishita to discuss with Mr. Laub the Atmel Board’s desire for Mr. Laub to extend his retirement date and for Mr. Sugishita to negotiate the form and terms of an extension letter with Mr. Laub.

Between August 21 and September 19, 2015, Atmel and its advisors conducted financial, business and legal due diligence reviews of each interested party engaged in Atmel’s strategic review process.

On August 24, 2015, the Atmel Board met to discuss the strategic review process. At that meeting, representatives of Qatalyst Partners reviewed the proposals previously submitted by all interested parties and further updated the Atmel Board on the process. Following this discussion, the Atmel Board determined to re-engage Microchip in the process based on recent stock market volatility and its effect on the value of proposals that included stock as a part of the transaction consideration. During that meeting, Mr. Sugishita also informed the Atmel Board that Mr. Laub had agreed to the Atmel Board’s request to extend his retirement date. The Atmel Board reviewed the draft press release announcing the extension of Mr. Laub’s retirement date.

On August 24, 2015, with approval from the Atmel Board, Atmel announced the extension of Mr. Laub’s retirement date to facilitate the completion of the strategic review process.

On August 24, 2015, representatives of Company B’s financial advisor informed representatives of Qatalyst Partners of Company B’s withdrawal from Atmel’s strategic review process because of valuation concerns and Company B’s unwillingness to consider any increase in the value of its preliminary indication of interest. On August 25, 2015, a member of Company B’s management team confirmed its withdrawal with a representative of Qatalyst Partners.

On August 26, 2015, Mr. Sugishita contacted Mr. Sanghi and invited Microchip to submit a final proposal prior to the September 8, 2015 deadline communicated to the other bidders participating in the strategic review process. Mr. Sanghi indicated that as Microchip had previously terminated its consideration of the process, it was not in a position to submit a “best and final” offer in the same manner as the other bidders. After discussion, Mr. Sanghi informed Mr. Sugishita that Microchip would expedite its due diligence in the remaining time and submit a final preliminary indication of interest (at the same price stated in its August 14 indication of interest) to Atmel by September 8, 2015, and if Microchip’s bid was accepted and the parties entered into exclusivity, Microchip would work expeditiously to complete due diligence and negotiate a definitive agreement.

On August 27 and August 28, 2015, Messrs. Sugishita and Sanghi discussed matters related to Microchip’s expected preliminary indication of interest.

On August 31, 2015, the Atmel Board again met to discuss the status of the strategic review process. At that meeting, representatives of Qatalyst Partners updated the Atmel Board on due diligence reviews of and Atmel management meetings with the interested parties engaged in the process.

On August 31, 2015, a representative of Company D informed Qatalyst Partners of Company D’s withdrawal from the strategic review process to pursue other acquisition opportunities available to Company D.

On September 2, 2015, Mr. Sanghi delivered to Mr. Sugishita a proposed form of merger agreement prepared by Microchip’s legal counsel. Mr. Sugishita provided Mr. Sanghi with Atmel’s form of merger agreement, which had been provided to all other parties as part of the bidding process.

 

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On September 3, 2015, Messrs. Sugishita and Sanghi discussed due diligence matters and Atmel’s strategic review process.

On September 8, 2015, representatives of Qatalyst Partners, on behalf of Atmel, received each of Dialog’s and Company C’s final proposals. Microchip delivered its final proposal to Mr. Sugishita. Company A’s financial advisor informed representatives of Qatalyst Partners that Company A would not submit a final proposal by the deadline set forth in the final bid process letter; Company A did not subsequently submit a final proposal. Each of Dialog and Company C also submitted comments to the draft form of merger agreement that had been provided as part of the final bid package. The financial terms of each final proposal were as follows:

 

    Dialog proposed $10.40 per Atmel share, with $6.36 of the consideration payable in Dialog equity (through a fixed exchange ratio) and $4.04 payable in cash, representing an implied premium of 29% to Atmel’s stock price at the close of trading on September 8, 2015 and 38% to Atmel’s stock price on the close of trading on May 6, 2015 (the last trading day prior to the public announcement of Mr. Laub’s expected retirement).

 

    Company C proposed $9.35 per Atmel share, with $4.33 of the consideration payable in Company C stock (through a fixed exchange ratio) and $5.02 payable in cash, representing an implied premium of 16% to Atmel’s stock price at the close of trading on September 8, 2015 and 24% to Atmel’s stock price on the close of trading on May 6, 2015.

 

    Microchip proposed $9.00 per Atmel share payable in cash, representing an implied premium of 11% to Atmel’s stock price at the close of trading on September 8, 2015 and 19% to Atmel’s stock price on the close of trading on May 6, 2015.

Each of Dialog’s and Company C’s proposals required Atmel to enter into an exclusivity agreement prohibiting Atmel from engaging in discussions with other parties during a limited period of time.

On September 9, 2015, the Atmel Board met to discuss the strategic review process and the final bids submitted by Dialog, Company C and Microchip. At that meeting, representatives of Jones Day reviewed for the Atmel Board its fiduciary duties within the context of the strategic review process and, in particular, as it considered the proposals received. Representatives of Qatalyst Partners informed the Atmel Board that Company A requested a meeting on or about September 18 to discuss its interest in a strategic transaction with Atmel. Company A did not commit to the delivery of a final proposal. Representatives of Jones Day reviewed the terms and conditions of the draft merger agreements submitted by each of Dialog and Company C and the form of merger agreement submitted by Microchip. At the request of the Atmel Board, members of Atmel management offered the Atmel Board their perspectives on management meetings or management discussions held with each interested party that had submitted a final proposal and responded to questions raised by the Atmel Board. After discussions with members of Atmel management concluded, representatives of Qatalyst Partners discussed with the Atmel Board financial aspects of the proposals, including the financial condition and business performance of Dialog and Company C in light of the inclusion of equity in their proposals. Representatives of Qatalyst Partners discussed recent stock market volatility and its potential effects on the consideration proposed by both Dialog and Company C. Representatives of Qatalyst Partners noted that the implied value of the proposed consideration could vary between the signing and closing of a transaction depending on stock market conditions, the financial performances of, and expectations for, both the acquiror and target company, and macro-economic conditions. Representatives of Qatalyst Partners and Jones Day discussed with the Atmel Board required regulatory approvals identified in each proposal, the ability of the interested parties to consummate a transaction (including obtaining any required financing) and other structural and timing related considerations.

The Atmel Board then discussed factors affecting the strategic and competitive position of Atmel. These factors included, among others, Atmel’s financial and competitive position within the rapidly consolidating semiconductor industry and Atmel’s prospects as an independent company compared to the values implied by undertaking a strategic transaction with Dialog, Company C or Microchip. Following further discussion, the

 

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Atmel Board determined that it would be in the best interests of Atmel and its stockholders to continue exploring the possibility of a strategic transaction with Dialog. The Atmel Board determined to seek enhancements of the Dialog proposal, including (1) an increase in the cash portion of the consideration, without requiring an increase in the overall implied value (as Dialog’s management had made clear that Dialog’s proposal was its best and final offer with respect to the overall implied value), (2) obtaining final financing commitment letters from Dialog’s financing source, (3) addressing issues raised in Dialog’s revised draft of the merger agreement, including those related to termination fees and “no-shop” provisions, and mitigating possible closing risks associated with Dialog being a foreign public company, and (4) addressing questions related to Dialog’s management projections and analyst estimates. The Atmel Board also requested that Mr. Laub obtain further information regarding Dialog’s customer concentration risk and future revenue expectations with its largest customer. At the conclusion of that meeting, the Atmel Board instructed Atmel management and representatives of Qatalyst Partners and Jones Day to terminate discussions with Company C and Microchip and to focus on a potential strategic transaction with Dialog, based on the Atmel Board’s determination, at that time, that Dialog’s proposal offered more favorable economic terms than the proposals of Company C or Microchip.

After the September 9 Atmel Board meeting, representatives of Qatalyst Partners informed Dialog’s financial advisor of the Atmel Board’s decision to continue exploring the possibility of proceeding with Dialog’s proposal to acquire Atmel. Representatives of Qatalyst Partners also informed Dialog’s financial advisor that Atmel was not prepared to enter into an exclusivity agreement until Dialog had sufficiently addressed the concerns raised at the September 9 Atmel Board meeting.

On September 10, 2015, representatives of Qatalyst Partners informed Company C of the Atmel Board’s decision to proceed with another party. Later that day, Company C revised its offer to Atmel and delivered a letter to Qatalyst Partners in which Company C increased the cash component of its offer by $0.50 per share, for an aggregate value of $9.85 per share, with $4.33 of the consideration payable in Company C stock (through a fixed exchange ratio) and $5.52 payable in cash.

Also on September 10, 2015, Mr. Sugishita informed Mr. Sanghi of the Atmel Board’s decision to proceed with another party.

On September 11, 2015, the Atmel Board met to discuss the strategic review process with respect to Dialog and Company C. At that meeting, representatives of Qatalyst Partners informed the Atmel Board that Company C had increased the cash component of its offer by $0.50 per share to $5.52 per share, resulting in an aggregate value of $9.85 per share. The Atmel Board, together with its advisors, engaged in further discussion regarding the potential long-term value of the Dialog equity included within the Dialog proposal and the overall value of that proposal. Thereafter, representatives of Qatalyst Partners, Atmel management and Jones Day confirmed that Dialog provided responses to several of the matters raised by the Atmel Board during the September 9 Atmel Board meeting. Subsequent to the September 9 Atmel Board meeting, Dialog agreed to increase the cash portion of its offer to $4.65 per share without increasing the notional value of its offer, and agreed to modifications to the Dialog merger agreement to mitigate perceived closing risk, including modifications to provisions related to the timing of shareholder meetings, termination events, termination fees and expense reimbursement. Representatives of Qatalyst Partners reported that they were advised by representatives of Dialog’s financial advisor that Dialog’s increase to the cash component of the transaction consideration was its best and final offer. Mr. Laub also reported that Dialog satisfactorily addressed, and mitigated concerns related to, the questions associated with Dialog’s customer concentration risk and future revenue expectations, including Dialog’s view that it maintained a strong relationship with its largest customer and did not expect that relationship to deteriorate. Representatives of Qatalyst Partners informed the Atmel Board that Dialog anticipated delivering a draft of its final financing commitment letters to representatives of Qatalyst Partners and that it also expected to address Atmel’s remaining due diligence questions within the next few days. Given the foregoing factors, the Atmel Board determined that a potential combination with Dialog would be more attractive than with Company C and reaffirmed its decision to proceed with the negotiation of Dialog’s proposal. The Atmel Board authorized Atmel management to negotiate and execute an exclusivity agreement with Dialog, which had been requested by Dialog as a condition of its continued interest in pursuing a transaction.

 

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From September 12 and throughout the week of September 14, 2015, representatives of Jones Day and Davis Polk & Wardwell LLP, Dialog’s external counsel, continued to negotiate the terms of the Dialog merger agreement, including the amount of proposed termination fees and the extent of each party’s termination rights. Legal counsel for Atmel and Dialog exchanged multiple drafts of the Dialog merger agreement. During this period, Atmel and Dialog held additional meetings and discussions to complete their respective due diligence reviews of the other party’s business and financial condition.

On September 13, 2015, Atmel entered into a five-day exclusivity agreement with Dialog.

On September 17, 2015, Dialog delivered to Atmel a draft financing commitment letter from Dialog’s financing source. Between September 17 and 19, 2015, Dialog, Atmel and their respective advisors engaged in further negotiations and exchanged drafts of the proposed financing commitment letter.

On September 18, 2015, Atmel extended its exclusivity agreement with Dialog until September 19, 2015 at 11:59 p.m. Pacific Daylight Time.

On September 19, 2015, the Atmel Board met to review the terms and conditions of the proposed transaction with Dialog. At that meeting, representatives of Qatalyst Partners reviewed the financial terms of Dialog’s offer, which consisted of a combination of $4.65 in cash and 0.112 of a Dialog ADS for each Atmel share. As of September 19, 2015, the Dialog offer had an implied value equal to $10.42 per Atmel share, based on the closing price of Dialog ordinary shares on the Frankfurt Stock Exchange and the Euro to U.S. Dollar exchange rate reported on Bloomberg as of 5:30 p.m. Central European Summer Time on September 18, 2015, and represented an approximate 38% equity interest for Atmel stockholders in the combined entity. The Atmel Board discussed the terms of the Dialog merger agreement and determined that Dialog had satisfactorily addressed each of the matters related to the merger agreement that were raised by the Atmel Board during the September 9 board meeting. Representatives of Jones Day also reviewed the terms and conditions of the financing commitment letter of Dialog’s financing source. Following additional discussion by the Atmel Board, representatives of Qatalyst Partners rendered to the Atmel Board its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated September 19, 2015, to the effect that, as of September 19, 2015, and based upon and subject to the factors, assumptions, limitations, qualifications and conditions set forth in that opinion, the merger consideration to be received by holders of Atmel common stock (other than Dialog and its affiliates) was fair, from a financial point of view, to holders of Atmel shares.

The Atmel Board, with the advice and assistance of representatives of Qatalyst Partners, Jones Day and Atmel’s management, then evaluated and discussed the terms of the Dialog merger agreement and the transactions contemplated thereby. The Atmel Board took into consideration other proposals received by Atmel (including the forms of consideration), the information considered with respect to remaining an independent company, and the search process related to the recruitment of a possible new Chief Executive Officer. During that meeting, the Atmel Board also received an update from Mr. Laub regarding due diligence on Dialog’s largest customer. Mr. Laub’s update to the Atmel Board allayed concerns previously raised regarding Dialog customer concentration at, and dependency on, such customer. After further discussion and consideration of the financial and other information presented, the Atmel Board unanimously determined that the Dialog merger agreement, the performance by Atmel of its obligations thereunder and the consummation of the transactions contemplated thereby were advisable and fair to, and in the best interests of, Atmel and its stockholders.

On September 19, 2015, the Dialog merger agreement and related documents were executed and delivered by each of Atmel and Dialog. On September 18, 2015, the last trading day before the announcement of the execution of the Dialog merger agreement, Atmel’s common stock closed at a price of $7.27 per share.

On September 20, 2015, Atmel and Dialog issued a joint press release announcing the execution of the Dialog merger agreement. On the first trading day immediately following the announcement of the transaction, Dialog’s

 

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share price experienced a significant decline, falling from €45.33 to €36.75 per share, and reducing the value of the transaction with Dialog from $10.42 per share of Atmel common stock to $9.26 per share.

During the late afternoon of September 25, 2015, Company C submitted an unsolicited acquisition proposal to acquire Atmel. Pursuant to its terms, the unsolicited proposal was set to expire on September 27, 2015 at 11:59 p.m. Pacific Daylight Time. Atmel promptly notified Dialog, orally and in writing, and provided Dialog with a copy of this unsolicited proposal and Company C’s proposed form of merger agreement, as required by the terms of the Dialog merger agreement. Company C proposed a notional acquisition price of $9.26 per Atmel share, $5.52 of the consideration payable in cash and $3.74 payable in Company C stock (the stock portion of which would be, if Atmel preferred, subject to adjustment through a symmetrical 5% exchange ratio collar based on a comparison of the five-day average closing price of Company C stock at closing and the price of Company C stock on the date the definitive agreement was signed). Other than the newly proposed exchange ratio collar and a decline in the notional value of the offer from the offer Company C made on September 10, 2015 resulting from a decline since that date of approximately $1.30 per share in the price of Company C’s stock, Company C’s proposal was financially identical to the proposal submitted by Company C on September 10, 2015. On September 26, 2015, Company C delivered to Atmel a revised version of its proposed merger agreement to clarify certain terms. Atmel promptly notified Dialog, orally and in writing, and provided Dialog with a copy of Company C’s revised proposed merger agreement, as required by the terms of the Dialog merger agreement.

In the early morning of September 27, 2015, the Atmel Board met to discuss and evaluate Company C’s unsolicited proposal. Representatives of Jones Day reviewed Atmel’s contractual obligations under the Dialog merger agreement and the Atmel Board’s fiduciary duties in the context of the unsolicited proposal received from Company C. Representatives of Qatalyst Partners reviewed the financial terms and conditions of Company C’s unsolicited proposal, including the proposed exchange ratio collar. Representatives of Qatalyst Partners discussed with the Atmel Board the fact that the proposed exchange ratio collar would not result in any further adjustment to the exchange ratio (and the notional value of Company C’s proposal therefore would decline or increase) if Company C’s five-day average stock price at closing declined or increased by more than 5% compared to Company C’s stock price on the date the definitive agreement was signed. The Atmel Board, in consultation with representatives of Qatalyst Partners, discussed the decline in Company’s C stock price during the past several months, the decline in stock price from the date (September 10, 2015) on which the Company C prior offer had been made, and the implications, from a valuation standpoint, if Company C’s stock price continued to decline. Atmel management also discussed their perceptions of Company C’s financial and operating performance, the performance of Company C’s stock price and the possibility that Company C’s stock price could fall below the “floor” of the proposed 5% symmetrical collar, and the growth prospects for Company C based on due diligence conducted during the strategic review process.

Representatives of Jones Day reviewed the contractual terms and conditions of the Dialog merger agreement as applied to Company C’s unsolicited proposal. Representatives of Jones Day also noted that Dialog determined, after the execution of the Dialog merger agreement, that the issuance of Dialog ADSs to Atmel stockholders would not require an amendment of Dialog’s charter and so would not require a 75% super-majority vote contemplated by the Dialog merger agreement. In addition, representatives of Jones Day reported that Dialog had confirmed that antitrust filings would be required only in the United States, Romania and Germany.

After a discussion among those present at the meeting, including representatives of Qatalyst Partners and Jones Day, the Atmel Board concluded that the terms of Company C’s unsolicited proposal offered marginal potential value protection to Atmel and its stockholders. The Atmel Board then directed Messrs. Sugishita and Laub to contact Richard Beyer, Dialog’s Chairman, and Dr. Jalal Bagherli to confirm Dialog’s commitment to the merger. The Atmel Board also requested that representatives of Qatalyst Partners and Jones Day determine whether Dialog would amend the Dialog merger agreement to provide that the merger would be conditioned upon a simple-majority vote of Dialog shareholders (rather than a 75% super-majority vote) and the receipt of antitrust approvals (or the expiration of waiting periods) only in the United States, Germany and Romania.

 

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Later on September 27, 2015, Mr. Laub spoke with Dr. Bagherli, who confirmed Dialog’s commitment to the merger. In the evening of September 27, 2015, Mr. Laub and Dr. Bagherli spoke again to discuss the transaction. Mr. Laub requested that Dialog agree to amend the Dialog merger agreement in the manner described in the preceding paragraph.

Mr. Sugishita spoke with Mr. Beyer during the evening of September 27, 2015. Mr. Beyer also reaffirmed Dialog’s commitment to the merger and Dialog’s agreement to amend the Dialog merger agreement in the manner requested by Atmel.

During the late evening of September 27, 2015, the Atmel Board reconvened, together with representatives of Qatalyst Partners, Jones Day and Atmel management, to review the discussions between Mr. Laub and Dr. Bagherli, on the one hand, and Mr. Sugishita and Mr. Beyer, on the other hand, and to further review Company C’s unsolicited proposal. The Atmel Board considered, among other things, (1) the long-term value of Company C’s unsolicited proposal as compared to the long-term value of the merger with Dialog after consultation with its financial and legal advisors regarding the higher cash component included in Company C’s offer against the overall value, and long-term growth prospects, available to Atmel stockholders through Atmel’s combination with Dialog (including Atmel’s ability, through a combination, to leverage Dialog’s long-term relationship with its largest customer in a manner that would expand Atmel’s addressable market opportunity with such customer), (2) the long-term value of an Atmel and Company C combination, including expected financial performance, growth prospects and market opportunities, as compared to an Atmel and Dialog combination, (3) the likelihood of consummating the merger as compared to a potential business combination with Company C, (4) the marginal potential value protection of the exchange ratio collar to Atmel and its stockholders and (5) the ability of each of Dialog and Company C to integrate Atmel after consummating the transaction. After further consultation with Atmel management, representatives of Qatalyst Partners and Jones Day, the Atmel Board unanimously concluded that Company C’s unsolicited proposal did not constitute a “Company Superior Proposal” (as defined in the Dialog merger agreement) and would not reasonably be expected to result in a “Company Superior Proposal.” The Atmel Board unanimously determined to proceed with the merger and to allow Company C’s unsolicited proposal to expire by its terms. The Atmel Board also authorized members of Atmel management to execute the amendment to the merger agreement with Dialog.

On September 29, 2015, Atmel and Dialog executed the amendment to the Dialog merger agreement, and Dialog issued a press release announcing the amendment to the Dialog merger agreement.

On November 19, 2015, Dialog’s stockholders approved the transactions contemplated by the Dialog merger agreement.

On December 7, 2015, Microchip submitted a written, unsolicited acquisition proposal to acquire Atmel. Atmel promptly notified Dialog of the proposal, orally and in writing, and provided Dialog with a copy of the unsolicited proposal as required by the terms of the Dialog merger agreement. Microchip’s unsolicited proposal offered $9.00 per share in cash for all outstanding Atmel shares with an option to elect to receive up to $1 billion in aggregate consideration in the form of shares of Microchip stock (with the stock component value based on a 10-day average closing price measured at the last trading day before the transaction closing date), representing a premium of 2% above the implied value of the transaction with Dialog at the time of the bid.

On December 8, 2015, the Atmel Board met to discuss and evaluate Microchip’s unsolicited acquisition proposal. At that meeting, representatives of Qatalyst Partners reviewed, among other things, the financial terms of Microchip’s unsolicited proposal. Representatives of Jones Day reviewed, among other things, the Atmel Board’s fiduciary duties and Atmel’s contractual obligations under the Dialog merger agreement, both in the context of Microchip’s unsolicited proposal. Following a discussion, the Atmel Board determined to continue its evaluation of Microchip’s unsolicited proposal at the next Board meeting scheduled for December 10, 2015.

On December 10, 2015, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. Representatives of Jones Day reviewed Atmel’s contractual obligations under

 

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the Dialog merger agreement in the context of Microchip’s unsolicited proposal. The Atmel Board reviewed matters related to the Dialog merger and the unsolicited acquisition proposal submitted by Microchip, including the implied value to Atmel stockholders of a potential combination with Microchip, the current implied value of the Dialog merger and the outlook for Atmel’s and Dialog’s respective businesses. The Atmel Board and Atmel’s advisors discussed the stock market volatility experienced by Dialog since the execution of the Dialog merger agreement and the effects of that volatility on the merger consideration. Representatives of Qatalyst Partners also discussed potential future trading ranges for each of the Microchip and Dialog transactions, and the Atmel Board engaged in discussion regarding the potential short- and long-term values of both proposals. Following further discussion, the Atmel Board determined that (1) Microchip’s unsolicited acquisition proposal would reasonably be expected to result in a “Company Superior Proposal” (as defined in the Dialog merger agreement) and (2) the failure to participate in discussions or negotiations or furnish information to Microchip would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law. The Atmel Board did not determine, at that meeting, whether the proposal constituted a “Company Superior Proposal” under the terms of the Dialog merger agreement. The Atmel Board determined to engage in discussions with Microchip and to seek clarification of matters related to the unsolicited acquisition proposal. Mr. Sugishita sent a letter to Mr. Sanghi requesting clarifications of Microchip’s proposal, including (i) confirmation that any form of definitive merger agreement would be based on the executed version of the Dialog merger agreement (other than the financial terms thereof, as appropriately modified, and other terms specific to a foreign company such as Dialog that would be inapplicable to Microchip), (ii) provision of information concerning Microchip’s ability to finance the proposed transaction, (iii) specification of the precise scope of confirmatory due diligence that Microchip expected to undertake, and (iv) an assessment of the regulatory approvals that would be required to consummate the proposed transaction (including expected timing for obtaining those approvals).

On December 11, 2015, Atmel issued a press release acknowledging receipt of Microchip’s unsolicited acquisition proposal and indicating that the Microchip proposal has been determined by the Atmel Board as one that would reasonably be expected to result in a “Company Superior Proposal.”

On December 14, 2015, Wilson, Sonsini, Goodrich & Rosati, P.C. (“WSGR”), Microchip’s external legal counsel, submitted a draft merger agreement to Jones Day, based substantially on the terms of Atmel’s agreement with Dialog with certain modifications.

On December 15, 2015, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, representatives of Qatalyst Partners discussed Dialog’s revised financial guidance, issued earlier on December 15, 2015, for its fourth quarter of 2015, reflecting reduced financial projections. The Atmel Board discussed the implied value of the Dialog merger consideration and the continued diminution in value that might result from declining performance of, and lowered expectations for, Dialog. Representatives of Jones Day reviewed the terms and conditions of the draft merger agreement submitted by Microchip and discussed other matters related to a potential transaction with Microchip, including antitrust, financing and post-signing cooperation considerations, closing conditions and the status of Microchip’s due diligence review. Following a discussion, the Atmel Board instructed Atmel management to provide additional due diligence access to Microchip, and instructed the representatives of Qatalyst Partners and Jones Day to continue discussions with Microchip regarding the terms and conditions of the draft merger agreement.

From December 16, 2015 through January 12, 2016, representatives of Jones Day and WSGR continued to negotiate the terms of the draft merger agreement, including provisions related to proposed termination fees, restrictions on Atmel’s operations during the period between signing and closing of the proposed transaction, financing and post-signing cooperation covenants, and other matters related to the possible deferral of closing under specified conditions. Legal counsel for Atmel and Microchip exchanged multiple drafts of the merger agreement during that period. Microchip was also provided additional due diligence materials and undertook further meetings and discussions with Atmel management for purposes of completing its due diligence review.

On December 19, 2015, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, Atmel management discussed Microchip’s ability to finance

 

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the proposed transaction. Atmel management advised the Atmel Board of initial customer and employee reaction to the announcement of the Microchip proposal. Representatives of Qatalyst Partners informed the Atmel Board of a conversation with a Dialog representative regarding Dialog’s reaction to Microchip’s unsolicited proposal. Representatives of Qatalyst Partners also updated the Atmel Board on the current implied value of the Dialog transaction compared to Microchip’s unsolicited proposal. Representatives of Jones Day updated the Atmel Board on the status of negotiations with WSGR concerning the draft merger agreement, including negotiations related to certainty of closing, antitrust approvals, financing and post-signing cooperation matters. Representatives of Jones Day also informed the Atmel Board that Atmel and Microchip entered into a supplemental non-disclosure agreement to facilitate Atmel’s due diligence review of Microchip and its unsolicited proposal. Following a discussion, the Atmel Board directed the representatives of Qatalyst Partners and Jones Day to continue negotiations with Microchip and its advisors.

On December 22, 2015, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, Atmel management provided information regarding the status of Microchip’s due diligence review, the potential timing for relevant antitrust reviews and the status of discussions regarding transaction structuring. Representatives of Jones Day reviewed the revised draft of the merger agreement and discussed differences between the Microchip and Dialog transactions. Representatives of Qatalyst Partners discussed the material terms and conditions of the draft merger agreement.

On December 24, 2015, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, representatives of Qatalyst Partners reviewed the implied value of the Dialog merger consideration. Representatives of Qatalyst Partners also discussed the possible timing associated with each transaction (based on input from representatives of Jones Day), with illustrative present values of the Microchip proposal assuming closing dates materially later than expected with the Dialog transaction. Representatives of Jones Day provided an update on the status of Microchip’s due diligence and merger agreement negotiations. Representatives of Jones Day also reviewed fiduciary obligations and other considerations applicable to the Atmel Board’s evaluation of the Dialog and Microchip transactions. The Atmel Board instructed Jones Day to inform WSGR that it requested a response from Microchip to Atmel’s latest draft of the merger agreement by December 31, 2015. Following the meeting, Mr. Sugishita informed Mr. Sanghi of this request, and representatives of Jones Day and Qatalyst Partners similarly communicated the request to representatives of WSGR and J.P. Morgan, financial advisor to Microchip. During the course of such conversations, representatives of Microchip, WSGR and J.P. Morgan indicated that certain due diligence review was in process, including a meeting with Atmel’s business unit leaders.

On December 29, 2015, the Atmel Board met to receive an update on the status of discussions with Microchip. Representatives of Atmel management and Jones Day provided updates on Microchip’s due diligence review and on merger agreement negotiations. Representatives of Qatalyst Partners advised the Atmel Board that meetings between Mr. Sanghi and Atmel’s business unit leaders had been scheduled for the first week of January 2016 so that Microchip could satisfy its due diligence requirements.

On December 31, 2015, representatives of WSGR delivered a revised merger agreement to representatives of Jones Day.

On January 3, 2016, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, representatives of Jones Day and Qatalyst Partners, respectively, reviewed the draft merger agreement. A discussion occurred regarding Microchip’s proposed interim operations covenants and the potential effects of those restrictions on Atmel’s business between signing and closing. Representatives of Jones Day also discussed matters that could affect the certainty and timing of closing a transaction with Microchip. Following the discussion, the Atmel Board instructed Jones Day and Qatalyst Partners to continue merger agreement negotiations.

 

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On January 4, 2016, Mr. Sugishita contacted Mr. Sanghi to communicate Atmel’s position on matters related to the draft merger agreement. Messrs. Laub and Mr. Sanghi also discussed the terms and conditions of the draft merger agreement on January 4, 2016.

On January 5, 2016, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, Atmel management provided the Atmel Board with a preliminary assessment of Atmel’s financial performance during the fourth quarter of 2015, which would likely fall below Atmel’s previously announced financial guidance. Messrs. Sugishita and Laub updated the Atmel Board on their discussions with Mr. Sanghi. Representatives of Jones Day discussed the status of merger agreement negotiations.

On January 5, 2016, Mr. Sanghi met with the General Managers of Atmel’s Microcontroller, Automotive and Touch business units and the Senior Vice President of Worldwide Operations.

On January 6 and 7, 2016, Messrs. Laub and Sanghi further discussed the terms and conditions of the draft merger agreement.

On January 7, 2016, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, Mr. Laub provided an update on his discussions with Mr. Sanghi and representatives of Jones Day provided an update on merger agreement negotiations.

On January 8, 2016, the Microchip Board met with members of Microchip’s management team and representatives of WSGR to review the proposed acquisition of Atmel including the status of due diligence and negotiations of the draft merger agreement. The Microchip Board also discussed the proposed purchase price and financing of the transaction.

On January 10, 2016, the Atmel Board met to continue its discussion and evaluation of Microchip’s unsolicited acquisition proposal. At that meeting, Mr. Laub and representatives of Jones Day provided further updates on the status of negotiations with Microchip. Representatives of Qatalyst Partners reviewed the financial terms of the Dialog transaction and compared those terms to the terms of the proposed transaction with Microchip. Mr. Laub informed the Atmel Board that, according to Mr. Sanghi, Microchip intended to submit a binding, irrevocable offer to acquire Atmel on January 11, 2016.

On January 11, 2016, Messrs. Laub and Skaggs discussed with Mr. Sanghi and other members of Microchip management Atmel’s preliminary financial results for the fourth quarter of 2015.

On the evening of January 11, 2016, the Microchip Board met with members of Microchip’s management team and representatives of J.P. Morgan and WSGR and received reports on the due diligence and merger agreement discussions that had occurred since its meeting on January 8, 2016. The Microchip Board discussed the purchase price of the transaction and what proportion of the purchase price should be in cash and shares of Microchip common stock. Following discussion, the Microchip Board unanimously approved (i) a binding, irrevocable offer to acquire Atmel for $8.15 per share, consisting of $7.00 per share in cash and $1.15 per share in shares of Microchip common stock and (ii) the delivery by Microchip of an executed version of the merger agreement, subject solely to acceptance by Atmel.

On the evening of January 11, 2016, after Mr. Sanghi’s discussion with Messrs. Laub and Skaggs and after the meeting of the Microchip Board, Microchip submitted a binding, irrevocable offer to acquire Atmel, including an executed version of the merger agreement, subject solely to acceptance by Atmel.

Under the terms of the binding, irrevocable offer, Microchip proposed to purchase all of the outstanding shares of Atmel for $8.15 per share, consisting of $7.00 per share in cash and $1.15 per share in shares of Microchip common stock, valued at the average closing price for a share of Microchip common stock for the ten most

 

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recent trading days ending on the last trading day prior to the closing, with the maximum number of Microchip shares to be issued in the transaction capped at 13.0 million shares. To the extent that the number of Microchip shares issuable would exceed 13.0 million shares, the cash consideration per Atmel share would be increased such that the value of the combined cash and stock consideration would remain at $8.15 per share (as valued based upon the average closing price described in the previous sentence). Microchip’s binding, irrevocable offer was to expire by its terms at 5:00 p.m. Pacific Time, on January 19, 2016, the fifth business day following its delivery, which was intended to provide Atmel sufficient time to permit Dialog to submit a counteroffer as contemplated by the terms of the Dialog merger agreement.

On January 11, 2016, the Atmel Board met to discuss and evaluate Microchip’s binding, irrevocable offer to acquire Atmel. At that meeting, Mr. Laub reviewed the terms of Microchip’s offer. Representatives of Jones Day reviewed the terms of the Dialog merger agreement, comparing it to the executed form of the Merger Agreement. Representatives of Qatalyst Partners compared the financial terms of Microchip’s offer with the terms of the Dialog transaction, including the implied value of the Dialog merger consideration. Following a discussion, the Board instructed representatives of Jones Day and Qatalyst Partners to prepare additional information to enable the Atmel Board to compare the competing transactions.

In the morning of January 12, 2016, the Atmel Board met to discuss and evaluate Microchip’s binding, irrevocable offer to acquire Atmel. At that meeting, representatives of Jones Day reviewed the Atmel Board’s fiduciary duties and Atmel’s contractual obligations under the Dialog merger agreement. Representatives of Jones Day also reviewed the terms and conditions of the executed form of merger agreement submitted by Microchip, including termination rights and termination fees, closing conditions, antitrust and regulatory requirements, and post-signing cooperation and interim operating covenants. Representatives of Qatalyst Partners reviewed the financial terms of the Microchip offer and compared the implied value of the Dialog transaction with the value of the Microchip offer. Representatives of Qatalyst Partners also discussed Dialog management’s financial projections for the first quarter of 2016 as compared to publicly available research analyst or “street” expectations for Dialog’s 2016 first quarter financial performance. After considering the information presented by representatives of Jones Day and Qatalyst Partners, the Atmel Board discussed whether the Microchip offer constituted a “Company Superior Proposal” under the terms of the Dialog merger agreement. The Atmel Board determined to defer a decision on that matter and to reconvene during the evening of January 12 to further consider the question. Based on the discussions that had occurred during the board meeting on January 12, 2016, the Atmel Board instructed Jones Day to inform WSGR that a determination of the Atmel Board regarding whether the Microchip offer constituted a “Company Superior Proposal” might not be unanimous and that the form of definitive merger agreement between the parties would need to reflect that determination.

Following the Atmel Board’s meeting on the morning of January 12, 2016, Microchip advised Atmel in writing that its binding, irrevocable offer to acquire Atmel would expire at 10:00 p.m. Pacific Time on January 19, 2016, per Atmel’s request. Microchip also submitted a revised executed form of the Merger Agreement, which did not require that the Atmel Board unanimously approve the Merger Agreement or unanimously recommend that Atmel stockholders approve the transaction with Microchip.

The Atmel Board met in the evening of January 12, 2016 to continue its discussion and evaluation of Microchip’s binding, irrevocable offer. At that meeting, representatives of Jones Day again reviewed the terms of the form of final Merger Agreement, and confirmed that Microchip had agreed to revise the Merger Agreement to remove any requirement that the Atmel Board unanimously approve the transactions contemplated thereby. After consultation with Atmel’s legal and financial advisors and Atmel senior management, and commentary provided by members of the Atmel Board during those discussions, each member of the Atmel Board expressed a preliminary opinion on whether the Microchip offer constituted a “Company Superior Proposal” under the terms of the Dialog merger agreement. After additional discussion, the Atmel Board, by majority vote, determined (with Papken Der Torossian and Messrs. Laub and Wu voting against that determination) that Microchip’s binding, irrevocable offer constituted a “Company Superior Proposal” under the terms of the Dialog merger agreement and that it would reasonably be expected to be inconsistent with the Atmel Board’s fiduciary duties

 

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under applicable law to fail to effect a change of recommendation on the basis of Microchip’s binding, irrevocable offer. Mr. Laub, thereafter, discussed management’s recommendation to the Atmel Board that Atmel issue a press release announcing Atmel’s preliminary financial results for the fourth quarter of 2015. Following a discussion, the Atmel Board authorized Atmel management to prepare and issue a press release announcing preliminary financial results for the fourth quarter of 2015.

On that same date, Atmel provided Dialog with written notice of the Atmel Board’s intention to effect a change of recommendation and to terminate the Dialog merger agreement. Atmel provided Dialog with a copy of the definitive form of the Merger Agreement executed by Microchip. The written notice also informed Dialog that the Atmel Board would consider in good faith any changes to the Dialog merger agreement or other arrangements that might be offered in writing by, and would be legally binding upon, Dialog by 5:00 p.m. Pacific Time on January 19, 2016, the fourth business day after delivery of the written notice to Dialog.

On January 13, 2016, Atmel issued a press release announcing that the Atmel Board determined that Microchip’s unsolicited proposal constituted a “Company Superior Proposal” under the terms of the Dialog merger agreement. Atmel also issued a separate press release on January 13 announcing preliminary financial results for the fourth quarter of 2015.

On January 14, 2016, Atmel received a letter from Dialog informing Atmel that Dialog had determined not to propose any changes to the Dialog merger agreement or other arrangements related to the Dialog merger.

On January 19, 2016 the Atmel Board met to review the terms and conditions of the proposed Microchip transaction. At that meeting, representatives of Qatalyst Partners reviewed the financial terms of the Dialog merger agreement and the financial terms of the Microchip binding, irrevocable offer. Representatives of Jones Day reviewed the Atmel Board’s fiduciary obligations and Atmel’s contractual obligations under the Dialog merger agreement. Representatives of Jones Day informed the Atmel Board that the Dialog merger agreement permitted Atmel to terminate the Dialog merger agreement to enter into an alternative transaction, such as Microchip’s unsolicited proposal, if that alternative transaction constituted a “Company Superior Proposal.” Representatives of Jones Day next reviewed the terms and conditions of the Merger Agreement, noting material differences between the Dialog merger agreement and the Merger Agreement. Following additional discussion by the Atmel Board, representatives of Qatalyst Partners rendered to the Atmel Board its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated January 19, 2016, to the effect that, as of January 19, 2016, and based upon and subject to the factors, assumptions, limitations, qualifications and conditions set forth in that opinion, the merger consideration to be received by holders of Atmel common stock (other than Microchip and its affiliates) was fair, from a financial point of view, to holders of Atmel shares, as more fully described below in the section entitled “—Opinion of Atmel’s Financial Advisor” beginning on page 78 of this proxy statement/prospectus. The written opinion of Qatalyst Partners is attached to this proxy statement/prospectus as Annex B and is incorporated herein by reference.

The Atmel Board, after consultation with representatives of Qatalyst Partners, Jones Day and Atmel management, then evaluated, discussed and compared the terms of the Dialog merger agreement and the Merger Agreement. After considering the information with which it had been provided by its legal and financial advisors during the meetings held to discuss and evaluate the Microchip proposal, the Atmel Board’s extensive consultation with those advisors throughout the process, and related information offered by Atmel management, the Atmel Board determined by majority vote (with Messrs. Der Torossian, Laub and Wu voting against that determination) to terminate the Dialog merger agreement and enter into the Merger Agreement. The Atmel Board further determined by a majority vote (with Messrs. Der Torossian, Laub and Wu voting against that determination) that the Merger Agreement, the performance by Atmel of its obligations thereunder and the consummation of the transactions contemplated thereby were advisable and fair to, and in the best interests of, Atmel and its stockholders. Atmel promptly delivered a notice of termination to Dialog with respect to the Dialog merger agreement.

 

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Following the termination of the Dialog merger agreement on January 19, 2016, Atmel executed and delivered the Merger Agreement to Microchip, and Atmel and Microchip issued a joint press release announcing the execution of the Merger Agreement. Atmel thereafter paid the termination fee to Dialog as required under the Dialog merger agreement.

Recommendation of the Atmel Board; Atmel’s Reasons for the Merger

At its January 19, 2016 meeting held to evaluate the proposed Merger, the Atmel Board, by majority vote, approved the Merger Agreement and determined that the terms of the Merger are fair to and in the best interests of Atmel stockholders. The Atmel Board recommends that Atmel stockholders vote:

 

  1. FOR” the Merger Proposal;
  2. FOR” the Compensation Proposal; and
  3. FOR” the Atmel Adjournment Proposal.

Charles Carinalli, Dr. Edward Ross, Jack L. Saltich and David Sugishita, constituting a majority of the Atmel Board (Messrs. Carinalli, Saltich and Sugishita and Dr. Ross are sometimes collectively referred to as the “Majority Directors”), voted to approve the Merger Agreement and made the determination that the terms of the Merger are fair to and in the best interests of Atmel stockholders. In connection with the Majority Directors’ determination to approve the Merger Agreement, the Majority Directors concurrently determined to terminate Atmel’s then-pending merger agreement with Dialog, which had been entered into on September 19, 2015. As a result, the evaluations conducted by the Atmel Board and the determination related to the Merger Agreement involved concurrent evaluations and assessments of the terms of the Dialog merger agreement and the relative value that the Dialog transaction would offer to Atmel stockholders if completed. All members of the Atmel Board were determined to maximize stockholder value. Certain members of the Atmel Board believed, based on their individual assessment, evaluation and weighting of the factors discussed below, that the pending transaction with Dialog offered greater potential value to Atmel stockholders than the Merger. Papken Der Torossian, Steven Laub and Tsung-Ching Wu (Messrs. Der Torossian, Laub and Wu are sometimes collectively referred to as the “Minority Directors”) voted against the determination to approve the Merger Agreement and to terminate the Dialog merger agreement.

In evaluating the Merger and the Merger Agreement and arriving at its determination, the Atmel Board consulted with Atmel’s senior management, Atmel’s financial advisor, Qatalyst Partners, and Atmel’s outside legal counsel, Jones Day. The factors referenced below were discussed during meetings of the Atmel Board, with each individual member of the Atmel Board placing more or less emphasis or weight on particular factors, as described below. The emphasis and weighting of those factors led each of the Majority Directors and the Minority Directors to exercise his judgment in the manner reflected in the voting of the Atmel Board.

In making their determination to terminate the Dialog merger agreement and approve the Merger Agreement, and in concluding that the terms of the Merger are fair to and in the best interests of Atmel stockholders, the Majority Directors, while considering all factors referred to in this Section (including those referenced by the Minority Directors), placed greater emphasis or weight on the following factors than the Minority Directors (not in any relative order of importance):

 

    The fact that the Merger Consideration, payable in a mix of cash and Microchip common stock, had a value of $8.15 per share, representing a 2% premium over the per share implied value of $7.95 for the Dialog transaction, based on the closing price of Dialog’s ordinary shares and the Euro to U.S. Dollar exchange rate reported on Bloomberg as of 5:30 p.m., Central European Time, on January 15, 2016, the last NASDAQ trading day prior to the date of the public announcement of the Merger Agreement. In addition, the Merger Consideration represented a premium over the market prices at which Atmel shares traded prior to the announcement of the Dialog merger agreement, specifically representing a:

 

  ¡   

8% premium to Atmel’s closing stock price on May 6, 2015, the day prior to the public announcement that Atmel’s President and Chief Executive Officer, Mr. Laub, had informed the

 

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Atmel Board that he intended to retire as an officer and director of Atmel, effective August 31, 2015; and

 

  ¡    12% premium to Atmel’s closing stock price on September 18, 2015, the last trading day before the announcement of the Dialog merger agreement;

 

    The fact that Atmel stockholders will receive an immediate and substantial cash payout of $7.00 per share for their Atmel shares, compared to $4.65 per Atmel share under the Dialog merger agreement and, therefore, will realize greater certainty of value than was available to Atmel’s stockholders under the Dialog merger agreement;

 

    The decline in the value of the merger consideration offered by Dialog, which had declined from an implied value of $10.42 per share on September 18, 2015 to an implied value of approximately $7.95 per share on January 15, 2016, as a result of a decline in the Dialog stock price over that period, and the belief, in light of that decline, that the Merger Consideration is more favorable to Atmel stockholders than the consideration that would have been paid under the Dialog merger agreement;

 

    The continued volatility of, and downward trends in, the price of Dialog’s ordinary shares, the uncertainty regarding the future trading price of Dialog’s ordinary shares and the resulting uncertainties (and possible continuing declines) in value that would have been realized by Atmel stockholders at the time of closing the Dialog transaction;

 

    Dialog’s financial results for the third and fourth quarters of 2015, and anticipated financial results for the first quarter of 2016, as well as the current trends in the semiconductor industry and other macroeconomic factors, which suggest further volatility in consumer and other markets and potential downward pressure on semiconductor stocks;

 

    The fact that Atmel stockholders will receive Microchip stock having a fixed-value based on the closing price of Microchip common stock during the ten trading days prior to closing of the Merger, compared to the Dialog transaction in which the exchange ratio representing the equity portion of the Dialog merger consideration was fixed at the time the Dialog merger agreement was executed and declined significantly in value since the execution of the Dialog merger agreement;

 

    The closing risks associated with the Merger being comparable to the closing risks of a transaction with Dialog in light of (i) the terms of the Merger Agreement, including the requirement that Microchip pay to Atmel a $250 million reverse termination fee if the Merger does not close due to the failure to receive applicable antitrust approvals, (ii) the advice of legal counsel regarding the likelihood of receiving regulatory approvals for the Merger, and (iii) the fact that, unlike the Dialog transaction, the Merger is not subject to the approval of The Committee on Foreign Investment in the United States (CFIUS);

 

    Dialog’s reliance on a single customer for a significant portion of its revenues and the uncertainties regarding the financial and business outlook of Dialog if that customer’s financial and business outlook declines;

 

    Uncertainty regarding Dialog’s ability to achieve the full benefits of anticipated synergies from a merger between Atmel and Dialog;

 

    The belief that, under the circumstances, $8.15 per share was the highest price per Atmel share that Microchip was willing to pay, that the Majority Directors did not wish to risk the loss of Microchip’s offer by rejecting the proposal, and that the terms of the Merger Agreement were the most favorable terms to Atmel to which Microchip was then willing to agree; and

 

    The belief that a merger with Microchip would create a stronger, more diversified, combined company with the requisite scale, financial resources, technology, products, customer base, and global workforce to succeed in the rapidly consolidating semiconductor industry, in which Atmel stockholders would share through their receipt of shares of Microchip stock.

 

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In making their determination to vote against terminating the Dialog transaction and against the approval of the Merger Agreement, the Minority Directors, while considering all factors referred to in this Section (including those referenced by the Majority Directors), placed greater emphasis or weight on the following factors than the Majority Directors (not in any relative order of importance):

 

    The modest difference in the implied values of the Merger Consideration and the consideration reflected in the Dialog transaction, and the expected future recovery in the Dialog stock price that would potentially provide Atmel stockholders with greater value than that offered under the Merger Agreement;

 

    The fact that the Dialog transaction had received all antitrust regulatory approvals and was expected to close in March 2016, compared to the likely closing of the Merger sometime in the second quarter of 2016, or possibly later depending on the timing of receipt of required regulatory approvals, and the related effects of different closing dates on the present value of the merger consideration included in both transactions;

 

    The optionality afforded by the Dialog transaction (particularly as synergies are realized) arising from the significant decline in the price of Dialog shares since September 19, 2015, and the opportunity for Atmel stockholders to participate in the long-term equity appreciation of a combined Atmel and Dialog entity in which Atmel stockholders would be expected to own approximately 38% of the fully-diluted equity, including the enhanced exposure, through the combined entity, to growth opportunities related to Dialog’s relationship with its largest customer;

 

    The belief that Dialog’s stock price had effectively “bottomed,” would be less likely to suffer further material declines, and would be more likely to increase in value in the coming months, after taking into account the effects of the overall decline recently experienced in stock markets and in the stock prices of semiconductor companies, and the more recent declines in Dialog’s stock price attributable to the preannouncement of its 2015 fourth quarter financial results, market speculation regarding weak results for its largest customer, and the economic slowdown in China;

 

    The disruption to Atmel’s business, pending closing of the Merger, associated with entering into a transaction with a direct competitor, including potential adverse effects on employee retention, sales channel partners, new customer design activities and customer relationships;

 

    The belief, in light of the pending transaction with Dialog and potential synergies available to Microchip, that a determination to reject Microchip’s offer of $8.15 per share would potentially lead to a higher price per share from Microchip based on its significant interest in completing a transaction with Atmel; and

 

    The possible risks related to transaction structuring matters expected to be undertaken by Microchip in connection with the Merger, and the required cooperation of Atmel following the execution of the Merger Agreement.

During the course of their evaluations and deliberations, the Atmel Board discussed other factors that informed the respective decisions of each of the Majority Directors and Minority Directors, including the following (not in any relative order of importance):

 

    The fact that (i) as directed by the Atmel Board, representatives of Qatalyst Partners contacted 20 potential interested parties that Atmel believed would have the highest level of interest in a business combination with, or acquisition of, Atmel, (ii) Atmel executed non-disclosure agreements with, and provided initial due diligence access to, 14 interested parties, (iii) representatives of Qatalyst Partners delivered bid process letters to 13 of these interested parties, (iv) Atmel received preliminary non-binding indications of interest from, and provided further due diligence access to, seven of these interested parties, and (v) Atmel, at the conclusion of its strategic review process, received “best and final” acquisition proposals from three of these interested parties;

 

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    The fact that, following the announcement of the execution of the Dialog merger agreement, the terms of the Dialog merger agreement permitted Atmel to enter into negotiations with other parties that submitted unsolicited acquisition proposals and potentially interested parties had sufficient opportunity to do so following the announcement of the Dialog transaction on September 19, 2015, as reflected by Atmel’s receipt of two unsolicited acquisition proposals (as described in the section entitled “—Background of the Merger” beginning on page 53 of this proxy statement/prospectus), including the offer received from Microchip;

 

    The fact that, on January 14, 2016, Atmel received a letter from Dialog informing Atmel that Dialog had determined not to propose any changes to the Dialog merger agreement or other arrangements related to the Dialog merger;

 

    The fact that the Microchip offer was not subject to a financing condition and the assessment of the Atmel Board, after consultation with its financial advisor, that Microchip had adequate financial resources to pay the aggregate Merger Consideration;

 

    The expectation, based on analyses undertaken by Microchip, that Microchip anticipates achieving significant synergies from cost savings and incremental revenue growth in connection with the transaction;

 

    The risks associated with remaining independent as a stand-alone company (if that alternative remained available in light of the pending Dialog transaction, which could only be terminated under specified circumstances) and pursuing Atmel’s strategic plan, including (i) Atmel’s historical and projected financial performance as well as the decline in Atmel’s financial performance during the third and fourth quarters of 2015, (ii) the adverse effects on Atmel’s business of having been engaged in a strategic review process for an extended period of time and operating under the terms and restrictions of the Dialog merger agreement since September 2015, and the further uncertainties associated with market speculation regarding unsolicited acquisition proposals and perception risks related to “broken” deals, (iii) potential future competition, including from larger and better funded companies, (iv) challenges and risks associated with growing Atmel organically, including the lack of a designated chief executive officer to replace Mr. Laub upon his expected retirement, (v) the significant costs required to develop and market new products, (vi) the uncertainties associated with the evolution of one of Atmel’s targeted growth markets, the Internet of Things, and the potential timing lag in seeing significant demand within that market segment for Atmel’s products, (vii) the ability of Atmel to execute future strategic acquisitions in light of industry consolidation and the more limited financial resources that would likely be available to Atmel compared to its competitors, and (viii) the additional risk factors pertaining to Atmel that are included in its most recent quarterly report, which is incorporated by reference in this proxy statement/prospectus;

 

    The fact that the Atmel Board, having considered various alternative transactions and Atmel’s stand-alone valuation under various financial assumptions as a result of its strategic review process, determined, in consultation with its legal and financial advisors, that a merger of Atmel with a third party continued to be the most attractive transaction reasonably available to Atmel;

 

    The rapid and ongoing consolidation of companies within the semiconductor industry, which was likely to continue at an accelerating pace;

 

    The information and discussions with Atmel’s management regarding Microchip’s business, results of operations and financial and market position, and Atmel management’s expectations concerning Microchip’s future prospects and opportunities for long-term growth, including opportunities that might be available to the combined company that would likely not be available to Atmel as an independent company;

 

   

The fact that, on May 6, 2015, Atmel publicly announced Mr. Laub’s decision to retire as an officer and director of Atmel, and the (i) resulting uncertainty regarding Atmel’s future leadership, and (ii) information obtained and considered by the Atmel’s Search Committee as it conducted a search and

 

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engaged in candidate interviews, with the assistance of Spencer Stuart, an executive search consulting firm, for a potential replacement for Mr. Laub in parallel with its strategic review process;

 

    The approval of Microchip’s stockholders not being required to complete the Merger, as discussed further under the section entitled “The Merger Agreement” beginning on page 99 of this proxy statement/prospectus;

 

    The belief that the Merger will be approved by the requisite regulatory authorities without the imposition of conditions that would materially delay or otherwise result in the termination of the Merger Agreement;

 

    The fact that, unlike the Dialog transaction, the Merger is not subject to the approval of The Committee on Foreign Investment in the United States (CFIUS);

 

    The fact that the mixed cash and equity nature of the Merger Consideration offers Atmel stockholders the opportunity to participate in the future earnings and growth of the combined company;

 

    The terms and conditions of the Merger Agreement and the course of negotiations of the Merger Agreement, including, among other things:

 

  ¡    Atmel’s ability, subject to certain conditions, to provide information to and to engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal, and the Atmel Board’s ability, in the exercise of its fiduciary duties, to terminate the Merger Agreement and to enter into an acquisition agreement in connection with a “Company Superior Proposal,” as defined in the Merger Agreement,

 

  ¡    The Atmel Board’s ability, subject to certain conditions, to change its recommendation supporting the Merger in response to an intervening event, regardless of the existence of a competing or superior acquisition proposal, to the extent the Atmel Board determines that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable law,

 

  ¡    The Atmel Board’s belief that the terms of the Merger Agreement, including the termination fee and expense reimbursement payments to be made to Microchip upon termination of the Merger Agreement under specified circumstances, are not likely to significantly deter another party from making a “Company Superior Proposal,”

 

  ¡    The customary conditions to Atmel’s and Microchip’s obligations to complete the Merger, including the limited number of antitrust approvals on which closing is conditioned,

 

  ¡    The commitment made by Microchip to Atmel to use reasonable best efforts to obtain regulatory clearances, including under the HSR Act,

 

  ¡    The automatic three-month extension of the outside date of the Merger Agreement, if necessary to obtain required antitrust approvals, and

 

  ¡    Atmel’s ability specifically to enforce Microchip’s obligations under the Merger Agreement, including Microchip’s obligations to consummate the Merger;

 

    The opinion of Qatalyst Partners delivered orally, and in the form of a written opinion, to the Atmel Board dated January 19, 2016, to the effect that as of January 19, 2016, and based upon and subject to the factors, assumptions, limitations, qualifications and conditions set forth in such opinion, the Merger Consideration to be received by the holders of Atmel’s common stock, other than Microchip or its affiliates, was fair, from a financial point of view, to such holders, as more fully described below in the section entitled “—Opinion of Atmel’s Financial Advisor” beginning on page 78 of this proxy statement/prospectus;

 

   

The unsolicited feedback that Atmel received from certain of Atmel’s institutional stockholders regarding Atmel’s public announcement, on January 13, 2016, of the Atmel Board’s determination that

 

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Microchip’s unsolicited proposal constituted a “Company Superior Proposal” under the Dialog merger agreement;

 

    The fact that the approval of the Atmel stockholders is required to complete the Merger; and

 

    The availability of appraisal rights under Delaware law to the Atmel stockholders who do not vote to approve the Merger Agreement and comply with all the required procedures under Delaware law, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than or the same as the amount such stockholders would have received under the Merger Agreement.

In addition to the factors specifically emphasized or weighted by each of the Majority Directors and the Minority Directors, during the course of their evaluations and deliberations, the Atmel Board discussed other uncertainties, risks and potentially negative factors that informed the respective decisions of each of those groups of Directors, including the following (not in any relative order of importance):

 

    The fact that the Minority Directors did not support terminating the Dialog merger agreement and entering into the Merger;

 

    The past financial performance and appreciation in the stock price of Dialog since 2007, and the possibility, if Dialog’s stock recovered, that the Dialog transaction could have a higher implied value at closing than the Merger Consideration;

 

    Atmel’s obligation to pay Dialog a termination fee of $137.3 million upon termination of the Dialog merger agreement and Microchip’s unwillingness to directly pay the termination fee on Atmel’s behalf;

 

    The more limited potential equity upside available to Atmel stockholders in the Microchip transaction than would be available to Atmel stockholders in the Dialog transaction, in light of the fact that Atmel stockholders would be expected to own approximately 6% of Microchip’s fully-diluted equity, compared to 38% of Dialog’s fully-diluted equity after the closing of the respective transactions;

 

    The fact that the Merger Consideration is less than the amount initially offered by Microchip on December 7, 2015;

 

    The challenges inherent in the combination of two business enterprises of the size and scope of Atmel and Microchip, including the possibility that the anticipated cost savings and synergies and other benefits sought to be obtained from the transaction might not be achieved in the time frame contemplated or at all, and the other risks and uncertainties that could adversely affect the combined company’s operating results;

 

    The high debt leverage of a combined Atmel and Microchip entity, which could limit access to credit markets or make access more expensive and reduce operational and strategic flexibility;

 

    The fact that gains from the Merger Consideration received by Atmel stockholders in connection with the Merger will be taxable to Atmel stockholders for U.S. federal income tax purposes;

 

    The provisions in the Merger Agreement relating to the potential payment of a termination fee of $137.3 million under certain circumstances specified in the Merger Agreement, or up to $20 million of Microchip’s expenses in connection with the Merger, if the Merger Agreement is terminated as a result of Atmel stockholders not approving the Merger Agreement;

 

    The unsolicited feedback that Atmel received from certain of Atmel’s institutional stockholders regarding Atmel’s public announcement, on January 13, 2016, of the Atmel Board’s determination that Microchip’s unsolicited proposal constituted a “Company Superior Proposal” under the Dialog merger agreement;

 

    The timing of and potential higher certainty of closing the transaction with Dialog based on the receipt, at the time of executing the Merger Agreement, of all antitrust regulatory approvals required to consummate a transaction with Dialog, compared to uncertainties associated with the timing and receipt of regulatory approvals required for the Merger;

 

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    The risks associated with satisfying certain conditions related to antitrust clearances and the possibility that the Merger may not be completed and, if completed, the Merger is likely to close after the expected closing date of the Dialog transaction;

 

    The risks and costs to Atmel if the Merger fails to close, including diversion of management and employee attention, and the potential adverse effect on Atmel’s business and relationships with customers, distributors, sales representatives and suppliers;

 

    The adverse effect of uncertainties that arise prior to completion of the Merger, including on Atmel’s ability to attract, retain and motivate key personnel pending completion of the Merger;

 

    Restrictions on the conduct of Atmel’s business prior to consummation of the Merger, including the requirement that Atmel conduct its business in the ordinary course, subject to specific limitations that may delay or prevent business opportunities that arise before the completion of the Merger and that, absent the Merger Agreement, Atmel might have pursued, or that might prevent Atmel from taking actions to improve its cost structure absent the proposed Merger, or taking other actions, whether in the form of dividend payments, stock repurchases, restructuring, asset dispositions or otherwise, which Atmel might have undertaken in the absence of the proposed Merger;

 

    The possibility that the executive officers and directors of Atmel could have interests in the Merger that would be different from, or in addition to, those of Atmel’s stockholders; and

 

    The risks of the type and nature described under the sections entitled “Risk Factors” beginning on page 32 of this proxy statement/prospectus and “Special Note Regarding Forward-Looking Statements” beginning on page 42 of this proxy statement/prospectus.

In addition to the specific factors on which the Majority Directors placed greater emphasis or weight than the Minority Directors, the Majority Directors also concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were further outweighed by the benefits the Majority Directors expect Atmel and Atmel stockholders to achieve from the Merger.

This discussion of the information and factors considered by the Atmel Board includes specific factors to which each of the Majority Directors and Minority Directors gave more or less emphasis or weight and other factors, both positive and negative, considered by the Atmel Board during its deliberations. The discussion of these matters is not intended to be exhaustive and may not include all of the factors considered by the Atmel Board. In view of the wide variety of factors considered in connection with its determination to terminate the Dialog transaction and its concurrent evaluation of the Merger, and the complexity of these matters, the Atmel Board did not attempt to quantify the various factors that it considered in reaching its determination to terminate the Dialog transaction, to approve the Merger, and to make its recommendations to the Atmel stockholders. Rather, the Atmel Board viewed its decisions as being based on the totality of the information presented to it and the factors it considered, including the emphasis and weighting placed on certain of those factors by each of the Majority Directors and Minority Directors. The explanation of the Atmel Board’s reasons for the proposed transactions and all other information in this Section may be forward-looking in nature and therefore should be read in light of the factors discussed under the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 42 of this proxy statement/prospectus.

 

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Opinion of Atmel’s Financial Advisor

Atmel retained Qatalyst Partners to act as financial advisor to the Atmel Board in connection with a potential transaction such as the Merger and to evaluate whether the Merger Consideration to be received by Atmel stockholders, other than Microchip, Atmel or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Atmel selected Qatalyst Partners to act as its financial advisor based on Qatalyst Partners’ qualifications, expertise, reputation and knowledge of the business and affairs of Atmel and the industry in which it operates. Qatalyst Partners has provided its written consent to the reproduction of the Qatalyst Partners’ opinion in this proxy statement/prospectus. At the meeting of the Atmel Board on January 19, 2016, Qatalyst Partners rendered its oral opinion, that, as of such date and based upon and subject to the considerations, limitations and other matters set forth therein, the Merger Consideration to be received by Atmel stockholders, other than Microchip, Atmel or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Qatalyst Partners delivered its written opinion, dated January 19, 2016, to the Atmel Board following the meeting of the Atmel Board.

The full text of Qatalyst Partners’ written opinion to the Atmel Board dated January 19, 2016, is attached to this proxy statement/prospectus as Annex B and is incorporated by reference herein. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the Atmel Board and addresses only, as of the date of the opinion, the fairness from a financial point of view, of the Merger Consideration to be received by Atmel stockholders, other than Microchip, Atmel or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement, and it does not address any other aspect of the Merger. It does not constitute a recommendation as to how any Atmel stockholder should vote with respect to the Merger or any other matter and does not in any manner address the price at which the Atmel common stock or the Microchip common stock will trade at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion.

In arriving at its opinion, Qatalyst Partners reviewed the Merger Agreement, certain related documents, and certain publicly available financial statements and other business and financial information of Atmel and Microchip. Qatalyst Partners also reviewed certain forward-looking information relating to Atmel approved for its use, by Atmel’s management, including financial projections and operating data of Atmel (together, the “Extrapolated Street Case”). Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of Atmel and Microchip, including information relating to certain strategic, financial and operational benefits anticipated from the Merger, with senior executives of Atmel. Qatalyst Partners also reviewed the historical market prices and trading activity for the Atmel common stock and Microchip common stock and compared the financial performance of Atmel and Microchip and the prices and trading activity of the Atmel common stock and Microchip common stock with each other and with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as Qatalyst Partners deemed appropriate.

In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, Qatalyst Partners by Atmel and/or Microchip. With respect to the Extrapolated Street Case, Qatalyst Partners was advised by Atmel’s management, and Qatalyst Partners assumed, that, although Atmel’s actual financial performance and results have caused Atmel’s board of directors and management to be of the view that the future financial performance of Atmel would not be expected to exceed the Extrapolated Street Case, Atmel’s board of directors believes that the Extrapolated Street Case is a reasonable basis on which to arrive at the Qatalyst Partners opinion and instructed Qatalyst Partners to use and rely upon such projections for purposes of such opinion. Qatalyst Partners assumed that the Merger would be consummated in accordance with the terms set forth in the Merger Agreement, without any modification or delay. In addition,

 

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Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the proposed Merger, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on Atmel, Microchip or the contemplated benefits expected to be derived in the Merger. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Atmel or Microchip, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of Atmel’s management and Microchip’s management as to the existing and future technology and products of Atmel and Microchip and the risks associated with such technology and products. Qatalyst Partners’ opinion has been approved by Qatalyst Partners’ opinion committee in accordance with its customary practice.

Qatalyst Partners’ opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after the date of the opinion may affect Qatalyst Partners’ opinion and the assumptions used in preparing it, and Qatalyst Partners has not assumed any obligation to update, revise or reaffirm its opinion. Qatalyst Partners’ opinion does not address the underlying business decision of Atmel to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to Atmel. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the Merger Consideration to be received by Atmel stockholders, other than Microchip, Atmel or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement, and Qatalyst Partners expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Atmel’s officers, directors or employees, or any class of such persons, relative to the Merger Consideration.

The following is a brief summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated January 19, 2016. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized the Extrapolated Street Case described below in the section entitled “—Certain Unaudited Prospective Financial Information Reviewed by the Atmel Board and Atmel’s Financial Advisor” beginning on page 85 of this proxy statement/prospectus. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.

Illustrative Discounted Cash Flow Analysis

Qatalyst Partners performed an illustrative discounted cash flow (“DCF”) analysis, which is designed to imply a potential, present value of share values for the Atmel common stock as of December 31, 2015 by:

 

    adding:

 

  ¡  the implied net present value of the estimated future unlevered free cash flows of Atmel, based on the Extrapolated Street Case, for calendar year 2016 through calendar year 2019 (which implied present value was calculated by using a range of discount rates of 11.0% to 18.0%, based on an estimated weighted average cost of capital for Atmel);

 

  ¡  the implied net present value of a corresponding terminal value of Atmel, calculated by multiplying the estimated net operating profit after tax (“NOPAT”) in calendar year 2020, based on the Extrapolated Street Case, by a range of multiples of enterprise value to next-twelve-months estimated NOPAT of 13.0x to 18.0x, and discounted to present value using the same range of discount rates used in the bullet above; and

 

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  ¡  the cash and short-term investments of Atmel as of December 31, 2015;

 

    subtracting debt of Atmel as of December 31, 2015;

 

    applying a dilution factor of approximately 8% to reflect the dilution to current Atmel stockholders over the projection period due to the effect of future equity compensation grants, as projected by Atmel’s management; and

 

    dividing the resulting amount by the number of fully-diluted shares of Atmel’s common stock outstanding, adjusted for RSUs, performance grants and stock options outstanding, as provided by Atmel’s management, as of December 31, 2015.

Based on the calculations set forth above, this analysis implied a range of values for the Atmel common stock of approximately $5.93 to $9.35 per share.

Selected Companies Analysis

Qatalyst Partners compared selected financial information and public market multiples for Atmel with publicly available information and public market multiples for selected companies. The companies used in this comparison included those companies listed below and were selected because they are publicly traded companies in Atmel’s industry. Based upon research analyst consensus estimates for calendar year 2016, and using the closing prices as of January 15, 2016 for shares of the selected companies, Qatalyst Partners calculated, among other things, the price per share divided by the estimated earnings per share for calendar year 2016, which we refer to as the CY2016E EPS Multiples, for each of the selected companies below. The median CY2016E EPS Multiples among the following selected companies analyzed was 15.4x:

 

Selected Company

   CY2016 EPS Multiple  

Cypress Semiconductor Corporation

     12.5x   

Dialog Semiconductor plc

     9.1x   

Infineon Technologies AG

     13.3x   

Integrated Device Technology, Inc.

     15.5x   

Intersil Corporation

     17.0x   

M/A Com Technology Solutions Holdings, Inc.

     17.0x   

Maxim Integrated Products, Inc.

     16.4x   

Microchip Technology Incorporated

     14.1x   

Microsemi Corporation

     9.0x (1) 

Nordic Semiconductor

     21.3x   

NXP Semiconductors N.V.

     12.0x   

Semtech Corporation

     15.4x   

Silicon Laboratories Inc.

     18.8x   

STMicroelectronics N.V.

     15.4x   

Synaptics Incorporated

     8.2x   

Texas Instruments Incorporated

     15.5x   

 

(1) Does not reflect any pro forma adjustment for the announced acquisition of PMC-Sierra.

 

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Based on an analysis of the CY2016E EPS Multiples for the selected companies, Qatalyst Partners selected a representative range of 12.0x and 16.0x and applied this range to Atmel’s estimated calendar year 2016 earnings per share based on the Extrapolated Street Case. This analysis implied a range of values for Atmel common stock of approximately $4.50 to $6.00 per share based on the Extrapolated Street Case.

No company included in the selected companies analysis is identical to Atmel. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of Atmel, such as the impact of competition on the business of Atmel and the industry in general, industry growth and the absence of any material adverse change in the financial condition and prospects of Atmel or the industry or in the financial markets in general. Mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.

Selected Transactions Analysis

Qatalyst Partners compared twenty-seven selected public transactions involving companies in the semiconductor industry announced between September 2006 and November 2015. These transactions are listed below:

 

Announcement

Date

  

Target

  

Acquiror

   Enterprise Value /
NTM Revenue
Multiples
     Price / NTM EPS  

November 24, 2015

   PMC Sierra, Inc.    Microsemi Corporation      4.2x         18.6x   

November 18, 2015

   Fairchild Semiconductor International Inc.    ON Semiconductor Corporation      1.7x         25.6x   

November 9, 2015

   Pericom Semiconductor Corporation    Diodes Incorporated      2.1x         19.9x   

October 21, 2015

   SanDisk Corporation    Western Digital Corporation      3.1x         25.3x   

September 30, 2015

   EZchip Semiconductor Ltd.    Mellanox Technologies, Ltd.      4.8x         16.2x   

June 11, 2015

   Integrated Silicon Solution, Inc.    Uphill Investment Co.      1.9x         24.5x   

June 1, 2015

   Altera Corporation    Intel Corporation      7.7x         42.5x   

May 28, 2015

   Broadcom Corporation    Avago Technologies Limited      3.8x         19.0x   

May 7, 2015

   Micrel, Incorporated    Microchip Technology Incorporated      3.0x         42.4x   

April 30, 2015

   OmniVision Technologies, Inc.    Investor Group (led by Hua Capital Management Co., Ltd.)      1.0x         22.0x   

March 2, 2015

   Freescale Semiconductor, Ltd.    NXP Semiconductors N.V.      3.4x         18.1x   

February 25, 2015

   Emulex Corporation    Avago Technologies Limited      1.5x         14.3x   

 

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Announcement

Date

  

Target

  

Acquiror

   Enterprise Value /
NTM Revenue
Multiples
     Price / NTM EPS  

January 27, 2015

   Silicon Image, Inc.    Lattice Semiconductor Corporation      1.9x         36.9x   

December 1, 2014

   Spansion Inc.    Cypress Semiconductor Corporation      1.5x         16.8x   

October 14, 2014

   CSR plc    Qualcomm Incorporated      2.9x         27.1x   

August 20, 2014

   International Rectifier Corporation    Infineon Technologies AG      2.0x         26.3x   

June 9, 2014

   Hittite Microwave Corporation    Analog Devices, Inc.      6.6x         31.6x   

February 24, 2014

   TriQuint Semiconductor, Inc.    RF Micro Devices, Inc.      1.8x         32.4x   

December 16, 2013

   LSI Corporation    Avago Technologies Limited      2.7x         17.1x   

August 15, 2013

   Volterra Semiconductor Corporation    Maxim Integrated Products, Inc.      3.1x         30.5x   

July 12, 2013

   Spreadtrum Communications, Inc.    Tsinghua Unigroup Ltd.      1.6x         10.6x   

June 22, 2012

   MStar Semiconductor, Inc.    MediaTek, Inc.      2.1x         15.8x   

May 2, 2012

   Standard Microsystems Corporation    Microchip Technology Incorporated      1.8x         22.1x   

September 22, 2011

   Zarlink Semiconductor Inc.    Microsemi Corporation      2.0x         22.5x   

September 12, 2011

   NetLogic Microsystems, Inc.    Broadcom Corporation      8.3x         29.2x   

April 4, 2011

   National Semiconductor Corporation    Texas Instruments Incorporated      4.4x         21.5x   

January 5, 2011

   Atheros Communications, Inc.    QUALCOMM Incorporated      3.5x         23.5x   

October 4, 2010

   Actel Corporation    Microsemi Corporation      1.8x         15.0x   

December 13, 2007

   AMIS Holdings, Inc.    ON Semiconductor Corporation      1.7x         13.3x   

 

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Announcement

Date

  

Target

  

Acquiror

   Enterprise Value /
NTM Revenue
Multiples
     Price / NTM EPS  

August 13, 2007

   Sirenza Microdevices, Inc.    RF Micro Devices, Inc.      4.2x         22.8x   

December 4, 2006

   Agere Systems Inc.    LSI Logic Corporation      2.5x         22.6x   

September 15, 2006

   Freescale Semiconductor, Inc.    Investor Group      2.4x         20.3x   

For each of the transactions listed above, Qatalyst Partners reviewed, among other things, the implied fully diluted enterprise value of the target company as a multiple of the next-twelve months revenue of the target company as reflected in certain publicly available financial statements and press releases, the median of which was 2.4x. Based on the analysis of such metrics for the transactions noted above, Qatalyst Partners selected a representative range of 2.0x to 3.5x applied to Atmel’s next-twelve months revenue (calculated as the four quarters that start on January 1, 2016 and based on the Extrapolated Street Case). Based on the calculations set forth above, then subtracting net debt of Atmel as of December 31, 2015, and then dividing the resulting amount by Atmel’s fully-diluted shares (using the treasury stock method), including common stock, RSUs, performance grants and stock options outstanding as provided by Atmel’s management for the period ended December 31, 2015, this analysis implied a range of values for the Atmel common stock of approximately $5.77 to $9.82 per share.

For each of the transactions listed above, Qatalyst Partners also reviewed, among other things, the price as a multiple of the next-twelve months earnings per share of the target company as reflected in Wall Street analyst research, certain publicly available financial statements and press releases, the median of which was 22.3x. Based on the analysis of such metrics for the transactions noted above, Qatalyst Partners selected a representative range of 18.0x to 27.0x applied to Atmel’s next-twelve-months estimated earnings per share (calculated as the four quarters that start on January 1, 2016 and based on the Extrapolated Street Case). Based on the calculations set forth above, this analysis implied a range of values for the Atmel common stock of approximately $6.75 to $10.13 per share.

No company or transaction utilized in the selected transactions analysis is identical to Atmel or the Merger. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to general business, market and financial conditions and other matters, many of which are beyond the control of Atmel, such as the impact of competition on the business of Atmel or the industry generally, industry growth and the absence of any material adverse change in the financial condition of Atmel or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared. Because of the unique circumstances of each of these transactions and the Merger, Qatalyst Partners cautioned against placing undue reliance on this information.

Miscellaneous

In connection with the review of the Merger by the Atmel Board, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and

 

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factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of Atmel. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Atmel and Microchip. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the Merger Consideration to be received by the Atmel stockholders, other than Microchip, Atmel or their respective subsidiaries and except for dissenting stockholders, pursuant to the Merger Agreement, and in connection with the delivery of its opinion to the Atmel Board. These analyses do not purport to be appraisals or to reflect the price at which the Atmel common stock might actually trade.

Qatalyst Partners’ opinion and its presentation to the Atmel Board was one of many factors considered by the Atmel Board in deciding to approve the Merger Agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Atmel Board with respect to the Merger Consideration to be received by Atmel’s stockholders pursuant to the Merger or of whether the Atmel Board would have been willing to agree to a different consideration. The Merger Consideration was determined through arm’s-length negotiations between Atmel and Microchip and was approved by the Atmel Board. Qatalyst Partners provided advice to Atmel during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to Atmel or that any specific consideration constituted the only appropriate consideration for the Merger.

Qatalyst Partners provides investment banking and other services to a wide range of corporations and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of Atmel, Microchip or certain of their respective affiliates. During the two year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners and its affiliates and Atmel or Microchip pursuant to which compensation was received by Qatalyst Partners or its affiliates other than Qatalyst Partners acting as financial advisor to Atmel in connection with its acquisition of Newport Media, Inc. (for which services Qatalyst Partners was paid a fee of $2,100,000); however, Qatalyst Partners and its affiliates may in the future provide investment banking and other financial services to Atmel or Microchip or any of their respective affiliates for which it would expect to receive compensation.

Under the terms of its engagement letter, Qatalyst Partners provided Atmel with financial advisory services in connection with the proposed Merger for which it will be paid approximately $25,000,000, $150,000 of which was paid in connection with the execution of such engagement letter, $5,000,000 of which was paid in connection with the delivery of its opinion in connection with the Dialog Merger Agreement (regardless of the conclusion reached in the opinion), $5,000,000 of which became payable upon delivery of its opinion (regardless of the conclusion reached in the opinion), and the remaining portion of which will be paid upon, and subject to, consummation of the Merger. Atmel has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. Atmel has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under federal securities law, and certain expenses related to or arising out of Qatalyst Partners’ engagement.

 

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Certain Unaudited Prospective Financial Information Reviewed by the Atmel Board and Atmel’s Financial Advisor

Atmel generally does not publicly disclose projections of its expected future financial performance or position because of, among other things, the inherent difficulty of accurately predicting financial performance for future periods and the possibility that the underlying assumptions and estimates may prove incorrect. While Atmel has not generally published financial projections, it has, from time to time, in its earnings press releases, published estimated ranges for its revenue and non-GAAP gross margin and operating expenses for the immediately succeeding calendar quarter.

In connection with the strategic review process conducted by the Atmel Board in 2015, Atmel management prepared non-public financial projections and operating data for Atmel as a stand-alone company, without giving effect to the Merger, in June 2015 (which we refer to as the “June Projections”) and in August 2015 (which we refer to as the “August Projections;” the June Projections and the August Projections are together referred to as the “Management Projections”). The June Projections were developed for internal review and consisted of financial prospects that reflected better projected financial performance than the August Projections. The June Projections reflected Atmel management’s view of Atmel’s future financial prospects as of June 2015. The June Projections assumed that Atmel’s business would achieve revenue growth over the forecast period, supporting a compound annual growth rate (“CAGR”) of 10% from 2015 to 2020 for overall Atmel revenue. The August Projections reflected downward adjustments to the June Projections to reflect Atmel’s actual financial results for its second quarter ended June 30, 2015, and also reflected Atmel management’s revised view of Atmel’s financial prospects as of August 2015. The August Projections assumed that Atmel’s business would achieve revenue growth over the forecast period supporting a CAGR of 9% from 2015 to 2020 for overall Atmel revenue. The Management Projections, other than as revised in the August Projections, did not attempt to take into account a variety of detailed assumptions or other matters that have changed since the preparation of the projections, such as Atmel’s actual 2015 financial performance, further consolidation within the semiconductor industry, changes to general economic or sector conditions, geopolitical matters, the effects that the strategic review process may have had on Atmel’s business after it entered into the Dialog merger agreement, or the restrictions on the conduct of Atmel’s business imposed by the terms of the Dialog merger agreement and the Merger Agreement. Both the June Projections and August Projections were based solely upon information available to Atmel management at the time of their preparation. The Management Projections were provided to the Atmel Board and to Qatalyst Partners. Atmel also provided the Management Projections to interested parties during the strategic review process. Because of the timing of Microchip’s engagement in the strategic review process, Atmel provided Microchip with only the August Projections.

Atmel’s actual financial results for the quarters ended September 30, 2015 and December 31, 2015 were less than the results for those periods included within the Management Projections. In light of the pending acquisition to which Atmel was subject after entering into the Dialog merger agreement on September 19, 2015, Atmel management did not prepare a revised set of projections after the August Projections, nor did it prepare an annual operating budget for 2016. For the purposes of Qatalyst Partners’ preparation of its opinion, Atmel instructed Qatalyst Partners to use and rely upon estimates of Atmel’s financial performance for the years ending December 31, 2016 and 2017 based on publicly available research analysts’ estimates and extrapolations from those estimates for the years ending December 31, 2018, 2019 and 2020, assuming that Atmel’s business would achieve revenue growth over the extrapolation period at a CAGR of 7% (which represented a lower rate than assumed for the August Projections to reflect Atmel’s actual financial results for the third and fourth quarters of 2015) and operating margin expansion from 12% in the fiscal year ended December 31, 2015 to 25% in the fiscal year ending December 31, 2020 (representing a lower margin than assumed for the August Projections to reflect the reduced revenue expectation), which we refer to as the “Extrapolated Street Case.” Although Atmel’s actual financial performance and results have caused the Atmel Board and Atmel management to be of the view that the future financial performance of Atmel would not be expected to exceed the Extrapolated Street Case, Atmel management advised Qatalyst Partners that the Atmel Board believed that the Extrapolated Street Case was a reasonable basis on which to arrive at Qatalyst Partners’ opinion and instructed Qatalyst Partners to use and rely

 

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upon such projections for purposes of its opinion. Research analysts do not have access to non-public information affecting Atmel and projections were only available for 2016 and 2017. The views of research analysts are not necessarily predictive of future performance and may change from time to time.

The summary set forth below includes both the Management Projections and the Extrapolated Street Case, which are referred to together as “unaudited prospective financial information.” The unaudited prospective financial information were not prepared with a view toward public disclosure, and the inclusion of the summary unaudited prospective financial information below should not be regarded as an indication that any of Atmel, Microchip or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results. The unaudited prospective financial information was developed based solely upon information available at the time of their preparation.

In addition, the unaudited prospective financial information was not prepared on a basis designed to comply with the guidelines established by the American Institute of Certified Public Accountants with respect to the preparation and presentation of projections. None of Atmel’s or Microchip’s independent registered public accounting firms, which are listed as experts in the section entitled “Experts” beginning on page 135 of this proxy statement/prospectus, nor any other independent accountants, has compiled, examined or performed any procedures with respect to the unaudited prospective information summarized below, nor expressed any opinion or any other form of assurance on this information or its achievability, and assumes no responsibility for, and disclaims any association with, the unaudited prospective financial information. The reports of the independent registered public accounting firms included or incorporated by reference in this proxy statement/prospectus relate to historical financial statements. They do not extend to any prospective financial information and should not be seen to do so.

Although presented with numerical specificity, the unaudited prospective financial information was developed in accordance with variables, estimates and assumptions that are inherently uncertain, susceptible to multiple interpretations and may be beyond the control of Atmel, and which may prove not to have been, or to no longer be, accurate (as is the case with the Management Projections). While in the view of Atmel’s management, the unaudited prospective financial information were developed on bases that were reasonable at the time of their preparation, the unaudited prospective financial information are subject to many risks and uncertainties. Important factors that may affect actual results and cause actual results to differ materially from the unaudited prospective financial information include risks and uncertainties relating to Atmel’s businesses (including the effects that the strategic review process may have had on Atmel’s business after it entered into the Dialog merger agreement in September 2015), industry performance, the regulatory environment, general business and economic conditions, market and financial conditions, transactions or events that were not anticipated at the time the unaudited prospective financial information was prepared, various risks set forth in Atmel’s reports filed with the Securities and Exchange Commission, and other factors described or referenced in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 42 of this proxy statement/prospectus.

The unaudited prospective financial information also does not take into account any circumstances, transactions or events occurring after the date the unaudited prospective financial information was prepared. Accordingly, actual results have differed and will likely continue to differ, and may differ materially, from those contained in the unaudited prospective financial information. Neither Atmel nor Microchip can assure you that the financial results in the unaudited prospective financial information will be realized, or that future financial results of Atmel will not materially vary from those in the unaudited prospective financial information.

None of Atmel, Microchip or their respective affiliates, officers, directors, or other representatives gives any Atmel stockholder, or any other person, any assurance that actual results will not differ materially from the unaudited prospective financial information, and, except as otherwise required by law, none of them undertakes any obligation to update or otherwise revise or reconcile the unaudited prospective financial information to reflect circumstances after the date the unaudited prospective financial information was generated, or to reflect the occurrence of future events, even in the event that any or all of the assumptions and estimates underlying the unaudited prospective financial information is shown to be in error.

 

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No one has made or makes any representation to any Atmel stockholder, or anyone else regarding, nor assumes any responsibility for the validity, reasonableness, accuracy or completeness of the unaudited prospective financial information. You are cautioned not to rely on the unaudited prospective financial information. The inclusion of this information should not be regarded as an indication that Atmel, Microchip or any other recipient of this information considered, or now considers, it to be material or to be a reliable prediction of actual future results. The unaudited prospective financial information has not been included to influence Atmel stockholders’ decision to vote for the adoption of the Merger Agreement.

The unaudited prospective financial information included below covers multiple years, and this information by its nature becomes subject to greater uncertainty with each successive year. The unaudited prospective financial information should be evaluated, if at all, in conjunction with the historical financial statements and other information contained in this proxy statement/prospectus and Atmel’s public filings with the Securities and Exchange Commission incorporated by reference herein.

The following tables present summaries of the Management Projections for the third and fourth quarters of calendar year 2015 and for calendar years 2016 through 2020 and the Extrapolated Street Case. Non-GAAP financial measures exclude the effects of share-based compensation expense, intangible amortization, acquisition and merger related charges, restructuring charges (credits), French building underutilization and other charges (credits), gain (loss) related to foundry arrangements, gain (loss) on sale of assets and investments, non-cash tax provisions, net income (loss) attributable to noncontrolling interest and other non-cash or non-recurring adjustments. The dollar amounts below are in millions, rounded to the nearest one million dollars, other than per share data.

Management Projections – June 2015

 

     Q3-Q4’2015E      2016E      2017E      2018E      2019E      2020E  

Revenue

   $ 646       $ 1,403       $ 1,599       $ 1,742       $ 1,874       $ 2,003   

Non-GAAP Operating Income (1)

     98         264         368         432         488         541   

Non-GAAP Earnings Per Share (2)

     0.22         0.56         0.71         0.79         0.89         0.97   

NOPAT (3)

     93         239         309         345         390         433   

Unlevered Free Cash Flow (4)

     97         290         297         359         386         436   

Management Projections – August 2015

 

     Q3-Q4’2015E      2016E      2017E      2018E      2019E      2020E  

Revenue

   $ 596       $ 1,332       $ 1,530       $ 1,666       $ 1,793       $ 1,916   

Non-GAAP Operating Income (1)

     77         244         349         409         461         513   

Non-GAAP Earnings Per Share (2)

     0.17         0.52         0.68         0.75         0.84         0.92   

NOPAT (3)

     74         222         293         328         369         411   

Unlevered Free Cash Flow (4)

     122         248         302         331         383         389   

Extrapolated Street Case

 

     2016E      2017E      2018E      2019E      2020E  

Revenue

   $ 1,185       $ 1,226       $ 1,312       $ 1,404       $ 1,502   

Non-GAAP Operating Income (1)

     168         249         302         351         376   

NOPAT (3)

     153         209         242         281         301   

Unlevered Free Cash Flow (4)

     176         215         243         291         282   

 

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(1) As used in this section of this proxy statement/prospectus, Non-GAAP Operating Income adjusts GAAP operating income to exclude costs (credits) associated with share-based compensation, intangible amortization, acquisition and merger related expenses, restructuring, French building underutilization, loss (gain) related to foundry arrangements, loss (gain) on sale of assets and investments, litigation reserves, financing arrangements, non-cash tax provisions, net income (loss) attributable to noncontrolling interest, and other non-cash or non-recurring adjustments.
(2) As used in this section of this proxy statement/prospectus, Non-GAAP Earnings Per Share is defined as consolidated net (loss)/income per share for such period adjusted for the following: costs (credits) associated with share-based compensation, intangible amortization, acquisition and merger related expenses, restructuring, French building underutilization, loss (gain) related to foundry arrangements, loss (gain) on sale of assets and investments, litigation reserves, financing arrangements, non-cash tax provisions, net income (loss) attributable to noncontrolling interest, and other non-cash or non-recurring adjustments.
(3) As used in this section of this proxy statement/prospectus, Net Operating Profit After Tax, which we refer to as NOPAT, reflects Atmel’s operating profits presented on a Non-GAAP basis, excluding costs described in Footnote (1) above on an after-tax basis.
(4) Unlevered free cash flow is a Non-GAAP financial measure calculated by starting with Non-GAAP operating income (as shown in the table above) and subtracting estimated taxes, capital expenditures, investment in working capital, cash payments associated with anticipated French building underutilization, and third party intellectual property license payments and then adding back depreciation expense.

Due to the forward-looking nature of the selected unaudited prospective financial information, specific quantifications of the amounts that would be required to reconcile it to GAAP measures are not available. Atmel believes that there is a degree of volatility with respect to certain GAAP measures, and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude Atmel from providing accurate forecasted non-GAAP to GAAP reconciliations.

Interests of Atmel’s Directors and Executive Officers in the Merger

In considering the recommendation of the Atmel Board with respect to the Merger, you should be aware that some of Atmel’s directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of Atmel stockholders generally. As described in more detail below, these interests include payments and benefits that are expected to be provided to the directors and executive officers upon consummation of the Merger or in connection with termination of their employment under certain circumstances prior to or following the Merger.

Treatment of Equity Awards Held by Atmel’s Directors and Executive Officers

The equity compensation held by directors and executive officers of Atmel will generally be treated in the Merger in the same manner as similar awards held by other employees of Atmel. See the section entitled “The Merger Agreement—Treatment of Atmel Options and Other Equity-Based Awards” beginning on page 100 of this proxy statement/prospectus. For the performance-based Atmel Units granted with a performance period that was intended to end December 31, 2015 (the “2015 PRSUs”), the Atmel Board determined that 57.0% of the target awards should vest contingent upon, and immediately prior to, the occurrence of the Effective Time, with the remaining 2015 PRSUs being converted into time-based awards that vest through November 15, 2017. In addition, in connection with the Merger, the Atmel Board determined that the Atmel Units granted in August 2015, for which performance criteria had not been established prior to the date of the Merger Agreement, will be converted, contingent upon the occurrence of the Effective Time, into time-based awards vesting through November 15, 2018. All outstanding Atmel Units held by non-employee directors of Atmel will vest in full on the Effective Time.

 

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The following table provides a summary of the unvested Atmel Units (including “performance share awards” denominated in restricted stock units) held by Atmel’s directors and executive officers as of May 1, 2016, which is the assumed date of the Closing for the purposes of this table, and that remain subject to single-trigger or double-trigger accelerated vesting in connection with the Merger. Consequently, the following table excludes all Atmel Units that vested prior to May 1, 2016 under the normal (non-accelerated) vesting schedule applicable to such awards, but have not yet been settled. The following table also assumes that no Atmel directors or executive officers will be granted additional equity awards after February 1, 2016, the latest practicable date before the filing of this proxy statement. As of February 1, 2016, no Atmel directors or executive officers held unvested Atmel Options.

 

     Number of Shares
Subject to
Outstanding and
Unvested Atmel
Units (1)
     Estimated Total
Value ($) (2)
 

Executive Officers

     

Steven Laub

     671,400       $ 5,471,908   

Steve Skaggs

     411,266       $ 3,351,816   

Reza Kazerounian

     527,521       $ 4,299,296   

Rob Valiton

     394,431       $ 3,214,616   

Scott Wornow

     324,072       $ 2,641,188   

Tsung-Ching Wu

     237,912       $ 1,938,981   

Hugo De La Torre

     94,363       $ 852,931   

Directors

     

David Sugishita

     22,064       $ 179,822   

Charles Carinalli

     22,064       $ 179,822   

Dr. Edward Ross

     22,064       $ 179,822   

Papken Der Torossian

     22,064       $ 179,822   

Jack L. Saltich

     22,064       $ 179,822   

 

(1) As discussed in more detail below, all of the outstanding and unvested Atmel Units (including “performance share awards” denominated in restricted stock units) held by Atmel’s executive officers other than Mr. Laub will accelerate and fully vest in the event of a termination of employment without “cause”, a resignation for “good reason” (as such terms are defined in the Senior Executive Change of Control and Severance Plan) or a termination of employment due to death or disability, in each case within the time period beginning three months before the Merger a change of control (as defined in the Senior Executive Change of Control and Severance Plan) and ending 24 months following the Merger.

As discussed in more detail below, if the Merger occurs and is consummated during Mr. Laub’s employment or at any time within nine months after the end of his employment, any outstanding equity award (including time-based and performance-based Atmel Units) that is, or was, scheduled to vest on or prior to the one year anniversary of the termination of his employment shall immediately vest. As noted below, Mr. Laub delivered written notice, consistent with, and subject to, the terms of the Laub Agreement, that the termination of his employment would be effective at the close of business on April 18, 2016. However, for purposes of this table only, the Company assumes that Mr. Laub’s employment is not terminated prior to May 1, 2016, the assumed date of the Closing for purposes of this table.

Pursuant to the terms of their award agreements, all outstanding Atmel Units held by non-employee directors of Atmel will vest in full on the Effective Time.

 

(2)

The estimated total value of the outstanding and unvested Atmel Units (including “performance share awards” denominated in restricted stock units) held by each director or executive officer as of May 1, 2016 was determined by multiplying (1) the number of shares of Atmel common stock subject to such outstanding and unvested Atmel Units as of May 1, 2016 that would be subject to accelerated vesting (as described in footnote 1) assuming a termination date of May 1, 2016 and (2) $8.15, which is the sum of the

 

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  dollar amount of Cash Consideration and Stock Consideration to be received by Atmel stockholders pursuant to the terms of the Merger Agreement.

The estimated amounts listed in this column do not include the number and estimated value of the 2015 PRSUs that were deemed to be credited and vest subject to the Closing immediately prior to the Effective Time. The value of such 2015 PRSUs is as follows: Mr. Laub (226,596 shares; $1,846,758); Mr. Skaggs (28,827 shares; $234,942); Mr. De La Torre (5,866 shares; $47,807); Mr. Kazerounian (33,520 shares; $273,188); Mr. Valiton (41,342 shares; $336,933); Mr. Wornow (20,112 shares; $163,912); and Mr. Wu (22,346 shares; $182,122).

Change of Control and Termination Benefits

Atmel has a Senior Executive Change of Control and Severance Plan (the “CoC Plan”), under which Atmel provides its senior executive officers, other than its CEO who is covered under a separate employment agreement, with severance benefits following a termination of employment, including a termination that occurs in connection with a change of control.

Senior Executive Change of Control and Severance Plan

Atmel’s Compensation Committee adopted the CoC Plan in which Atmel’s named executive officers (other than Atmel’s CEO, who is entitled to change of control and severance benefits under the terms of the Laub Agreement, as described below) are eligible to participate. As a condition to participation, each eligible executive officer executed a participation agreement and waived his or her right to any severance provided under any other agreement or plan.

In accordance with the CoC Plan, the named executive officers other than Mr. Laub (each, an “Eligible Participant”) will be entitled to receive the following severance benefits, contingent on such individual signing and not revoking a separation agreement containing a release of claims in favor of Atmel, in the event of a termination of employment without cause, a resignation for good reason or a termination of employment due to death or disability, in each case within the “change of control determination period”:

 

    A lump sum payment in cash equal to 100% of the Eligible Participant’s annual base salary, as in effect at the time of termination;

 

    A lump sum payment in cash equal to 100% of the Eligible Participant’s target incentive compensation for the year of termination;

 

    A lump sum payment in cash equal to 100% of the Eligible Participant’s target incentive compensation for the year of termination, pro-rated to the date of termination;

 

    100% vesting acceleration of unvested equity awards outstanding on the later of the date of termination or the change of control, other than performance-based restricted stock unit awards (“PRSUs”) or other equity compensation awards that vest based on achievement of express performance goals, which performance goals have not, as of the later of the date of his or her termination or change of control, been achieved (except to the extent the performance plan governing, or terms of, those performance-based awards otherwise provide for, and permit, acceleration of those performance-based awards irrespective of whether all applicable performance goals have, or have not, been achieved on the date of the termination or change of control);

 

    12 months Atmel-paid COBRA coverage; and

 

    Transitional outplacement benefits in accordance with the policies and guidelines of Atmel, as in effect immediately prior to the change of control.

Under the CoC Plan, “change of control determination period” means the time period beginning three months before a change of control (as defined in the CoC Plan) and ending 24 months following a change of control. The Merger constitutes a change of control as defined in the CoC Plan.

 

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Letter Agreement with Steve Laub, dated August 24, 2015 (the “Laub Agreement”)

On August 24, 2015, Steven Laub, Atmel’s Chief Executive Officer, agreed to a request from Atmel’s Board to extend his retirement date to facilitate the completion of the then-ongoing strategic evaluation process and entered into the Laub Agreement. Under the Laub Agreement, if a change of control occurs and is consummated during his employment or at any time within nine months after the end of his employment, his outstanding equity (including time-based and performance-based Atmel Units) that is, or was, scheduled to vest on or prior to the one year anniversary of the termination of his employment will vest. Mr. Laub’s outstanding equity awards will not immediately terminate with termination of his employment to the extent necessary to accommodate this right. In addition, specifically with respect to his 2015 PRSUs, if Mr. Laub’s employment ends for any reason on or before the initial cliff vesting date of such 2015 PRSUs, then, at a minimum, he will be deemed to vest in at least that one-third of such 2015 PRSUs that are credited to him based on Atmel’s level of achievement of the applicable performance goals. Finally, Mr. Laub is entitled to receive a pro-rated portion of his annual incentive bonus, assuming 100% of target achievement level, if he is terminated at any time after January 1, 2016. On January 19, 2016, Mr. Laub delivered written notice, consistent with, and subject to, the terms of the Laub Agreement, that the termination of his employment would be effective at the close of business on April 18, 2016 (at which time Mr. Laub’s resignation as a director would also take effect).

New Management Arrangements

To the best of Atmel’s knowledge, except as described in this paragraph, no new employment agreement, arrangement or understanding between any director or executive officer of Atmel, on the one hand, and Microchip, Merger Sub or Atmel, on the other hand, existed as of the date of this proxy statement, and neither the Merger nor any related transaction is conditioned upon any director or executive officer of Atmel entering into any such agreement, arrangement or understanding. There were no discussions regarding the post-transaction roles of members of the Atmel Board.

Director and Officer Indemnification and Insurance

Pursuant to the terms of the Merger Agreement, Microchip has agreed to indemnify and hold harmless, and advance expenses as incurred to, the directors and officers of Atmel for a period of six years following the Effective Time. The directors and officers of Atmel will also be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies following the effective time of the Merger. Such indemnification and insurance coverage is further described in the section entitled “The Merger Agreement—Indemnification and Insurance” beginning on page 113 of this proxy statement/prospectus.

Quantification of Change in Control and Termination Payments and Benefits to Atmel’s Executive Officers

The table below entitled “Potential Change of Control Payments to Named Executive Officers,” along with its footnotes, shows the compensation that may become payable in connection with, or following, the consummation of the Merger to Atmel’s named executive officers identified in Atmel’s most recent proxy statement with respect to its 2015 annual meeting of stockholders (i.e., Atmel’s principal executive officer, principal financial officer and three other most highly compensated executive officers as determined for purposes of such annual proxy statement) as required by Item 402(t) of Regulation S-K.

Please note that the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date and do not reflect additional compensation actions that may occur before the completion of the Merger. As a result, the actual amounts, if any, to be received by a named executive officer may differ in material respects from the amounts set forth below.

 

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For purposes of calculating the amounts indicated below, and except as expressly set forth below, we have assumed:

 

    that the Effective Time, and the date on which the Merger closes, is May 1, 2016, which is assumed solely for purposes of calculating amounts set forth in the table below; the actual Effective Time, and the Closing Date, is subject to satisfaction or waiver of conditions set forth in the Merger Agreement, including governmental and regulatory approvals, that could affect the actual timing of the Closing;

 

    the relevant price per share of Atmel common stock is $8.15, which is the sum of the dollar amount of Cash Consideration and Stock Consideration to be received by Atmel stockholders pursuant to the terms of the Merger Agreement;

 

    each named executive officer, other than Mr. Laub, is terminated by Microchip without “cause” or resigned for “good reason” (as such terms are defined in the relevant plans and agreements) and Mr. Laub resigns, in each case, immediately following the assumed Effective Time, which, as noted above, is assumed to be May 1, 2016 for the purposes of the table set forth below (each, referred to as a “qualifying termination”);

 

    quantification of outstanding equity awards is calculated based on the outstanding equity awards held by each named executive officer as of February 1, 2016, the latest practicable date before the filing of this proxy statement, and no named executive officer will be granted additional equity awards after such date; and

 

    all unvested equity awards held by each named executive officer as of February 1, 2016 continue to vest through May 1, 2016.

Potential Change of Control Payments to Named Executive Officers

 

Named Executive Officer

   Cash($) (1)      Equity($) (2)      Perquisites/
Benefits (3)
     Other (4)      Total  

Steven Laub

     —         $ 5,471,908         —           —         $ 5,471,908   

Steve Skaggs

   $ 989,260       $ 3,351,816       $ 18,930       $ 3,500       $ 4,363,513   

Reza Kazerounian

   $ 1,107,466       $ 4,299,296       $ 18,930       $ 3,500       $ 5,429,198   

Robert Valiton

   $ 923,310       $ 3,214,616       $ 17,952       $ 3,500       $ 4,159,378   

Scott Wornow

   $ 846,734       $ 2,641,188       $ 18,936       $ 3,500       $ 3,510,358   

 

(1) Cash. The estimated amounts listed in this column represent the aggregate value of cash severance each named executive officer, other than Mr. Laub, would be entitled to receive under the CoC Plan, or, in the case of Mr. Laub, under the terms of the Laub Agreement, in connection with a qualifying termination immediately following the Merger. Severance payments under the CoC Plan are “double-trigger” benefits. Under the Laub Agreement, Mr. Laub is entitled to receive a pro-rated portion of his target annual incentive bonus for any qualifying termination that occurs in 2016. On January 19, 2016, Mr. Laub delivered written notice, consistent with, and subject to, the terms of the Laub Agreement, that the termination of his employment would be effective at the close of business on April 18, 2016. Mr. Laub is entitled to receive a pro-rated portion of his annual incentive bonus, assuming 100% of target achievement level, if he is terminated at any time after January 1, 2016. Assuming a termination date of April 18, 2016, Mr. Laub’s corresponding pro-rated portion of his annual incentive bonus would equal $357,436. The estimated amounts shown in this column are based on the compensation levels in effect on February 1, 2016, the latest practicable date to determine such amounts before the filing of this proxy statement. Therefore, if compensation levels are changed after such date, actual payments to a named executive officer may be different than those listed in this column. For additional information see the section entitled “—Interests of Atmel’s Directors and Executive Officers in the Merger” beginning on page 88 of this proxy statement/prospectus.

 

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(2) Equity. The estimated amounts listed in this column represent the aggregate value each named executive officer would be entitled to receive in connection with a qualifying termination immediately following the Merger in respect of each named executive officer’s unvested Atmel Units as of May 1, 2016, which is the assumed date of the Closing for the purposes of this table and footnote, as set forth in more detail in the table below. As of February 1, 2016, the latest practicable date before the filing of this proxy statement, no named executive officers held unvested Atmel Options. For the named executive officers other than Mr. Laub, payments in respect of unvested Atmel Units are “double-trigger” benefits. For Mr. Laub, if a change of control occurs and is consummated during his employment or at any time within nine months after the end of his employment, any outstanding equity award (including time-based and performance-based Atmel Units) that is, or was, scheduled to vest on or prior to the one year anniversary of the termination of his employment shall immediately vest. For additional information, please see the sections entitled “—Interests of Atmel’s Directors and Executive Officers in the Merger—Change of Control and Termination Benefits” beginning on page 90 of this proxy statement/prospectus and “The Merger Agreement—Treatment of Atmel Options and Other Equity-Based Awards” beginning on page 100 of this proxy statement/prospectus. The estimated amounts listed in this column do not include the estimated value of the 2015 PRSUs that were deemed to be credited and vest subject to the Closing immediately prior to the Effective Time. The value of such 2015 PRSUs is as follows: Mr. Laub ($1,846,758); Mr. Skaggs ($234,942); Mr. Kazerounian ($273,188); Mr. Valiton ($336,933); and Mr. Wornow ($163,912).

 

Named Executive Officer

   Aggregate Value of
Options ($)
     Aggregate Value of
RSUs and PRSUs($)
     Total  

Steven Laub

     —        $ 5,471,908       $ 5,471,908   

Steve Skaggs

     —        $ 3,351,816