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Wow! *This* is the power move in microcontroller arena! This is big news – Microchip, along with OnSemi, are attempting to buy Atmel, a news item of potential note to those makers who use microcontrollers (the popular Ardunio for example uses an Atmel AVR)… Thanks Jaime G!

Microchip Technology Incorporated (NASDAQ: MCHP) and ON Semiconductor Corporation (NASDAQ: ONNN) today announced that they have sent a proposal to the Board of Directors of Atmel Corporation (NASDAQ: ATML) to acquire Atmel for $5.00 per share in cash. The proposal, which is being led by Microchip, provides a premium of 52.4% to Atmel’s closing price of $3.28 on October 1, 2008, and values Atmel at $2.3 billion.

There’s more… some drama it seems.

We appreciate your having taken the time to meet with Steve Sanghi on September 5th to discuss Microchip’s potential acquisition of Atmel. However, we were deeply disappointed to learn subsequently that the Atmel Board of Directors appears unwilling to consider a transaction at this time under any circumstances. Given your apparent refusal to engage in transaction discussions, we are writing to you to formally propose an acquisition of Atmel for $5.00 per share in cash. The acquisition would be led by Microchip and financed in part by the sale of Atmel’s nonvolatile memory and RF and automotive businesses to ON Semiconductor.

Interesting questions to consider: Is Microchip hedging that Atmel’s products will start to take more market share or are they looking to kill the Atmel line altogether?

Someone phone this in to Cramer and see what he thinks!