NEW YORK (TheStreet) -- Atmel Corp. (ATML)  announced today that Microchip Technology (MCHP) will acquire the semiconductor manufacturer for $3.56 billion in a cash and stock deal. 

Shares of Atmel are advancing 0.07% to $7.99 on heavy trading volume and Microchip stock is rallying 1.37% to $42.27 on Wednesday. 

"Microchip and Atmel have a strong tradition of innovation, stretching across microcontroller, analog, touch, connectivity and memory solutions," Microchip COO Ganesh Moorthy stated. "Joining forces and combining our product portfolios will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve."

By agreeing to the deal, Atmel is terminating its agreement with Dialog Semiconductor for a fee of $137.7 million.

In September, Dialog proposed to buy Atmel for about $4.6 billion. However, the chipmaker said last week that Microchip's unsolicited bid was "superior" to the agreement with Dialog.  

Under the Microchip deal, Atmel investors will get a higher proportion in cash per share compared with the Dialog deal, the New York Times reports. 

TheStreet Ratings has a Hold rating on the stock with a letter grade of C given some strengths and some weaknesses. 

The company's positives can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, weaknesses include deteriorating net income, disappointing return on equity and weak operating cash flow.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: ATML

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