Atmel jumps on offer; KKR, EDF to shoot for Constellation Energy; Take-Two Interactive stays single

By Aaron Hochman-Zimmerman

New York, Oct. 2 - Stocks were battered again Thursday as investors were busy selling during the last session before the scheduled vote on the bailout package in the House of Representatives.

One of the few big winners on the day was small cap Atmel Corp., which made a name for itself as its share price launched on the news of a joint unsolicited bid from Microchip Technology Inc. and ON Semiconductor Corp.

Stars fell for Constellation Energy Group, Inc. even as rumors were traded about a possible higher offer from private equity firm Kohlberg Kravis Roberts & Co. and French utility Electricite de France SA.

Elsewhere, Hexion Specialty Chemicals, Inc. agreed to comply with a Federal Trade Commission order to divest an epoxy division in order to comply with antitrust rules in preparation for the contested merger with Huntsman Corp.

Also, long-time deal-land resident Take-Two Interactive Software Inc., which fought a long battle for a better price from abortive suitor Electronic Arts Inc., checked out and decided to carry on as an independent company.

Meanwhile, the Dow Jones Industrial Average sold off 348.22, or 3.22%, to finish at 10,482.85, while the Nasdaq Composite Index lost 92.68, or 4.48%, to finish at 1,976.72.

The S&P 500 bled another 46.78, or 4.03%, to close at 1,114.28.

Joint offer touches off launch for Atmel

Microchip Technology and ON Semiconductor ganged up to offer $5.00 per share, or $2.3 billion, for Atmel, according to a joint press release.

Microchip has the lead on the offer, which amounts to a 52.4% premium to Atmel's closing price on Wednesday.

The cash offer came in the form of a letter to Steven Laub, Atmel's president and chief executive officer.

"This offer is full and fair and would deliver to your stockholders CY2008 EBIT and CY2008 P/E multiples of 19x and 28x, respectively," wrote Steven Sanghi, president, chairman and CEO of Microchip, and Keith Jackson, president and CEO of ON Semiconductor.

"It is clear that your businesses would thrive inside Microchip and ON Semiconductor," they continued.

Sanghi and Jackson encouraged Laub to meet quickly and noted that JPMorgan Chase & Co. has been retained as a financial adviser.

However, Atmel was apparently not impressed.

On a conference call, an analyst learned that the Atmel board said it does not want a deal with Microchip Technology and ON Semiconductor under any set of circumstances.

Investors disagreed with Atmel as its shares (Nasdaq: ATML) rifled up by $1.12, or 34.15%, to $4.40.

Shares of Microchip Technology (Nasdaq: MCHP) slid by $1.43, or 4.96%, to $27.39.

Shares of ON Semiconductor (Nasdaq: ONNN) gave back $0.96, or 14.68%, to finish at $5.58.

KKR, EDF eye Constellation

Talk of a higher offer clung to Constellation as the 14-day due diligence period expired for MidAmerican's $26.50-per-share offer.

Meanwhile, market rumors held that Kohlberg Kravis Roberts and Electricite de France are expected to bring a higher offer, a market source said.

Still, "with MidAmerican's affirmation of the stability and underlying strength of Constellation Energy and the recent infusion of $1 billion to increase our liquidity, we are now poised to successfully complete the merger approval process," Mayo Shattuck, chairman, president and CEO of Constellation, said in a statement.

Constellation expects the transaction with Berkshire Hathaway Inc.'s MidAmerican Energy to close in the second half of 2009.

Shares of Constellation (NYSE: CEG) dropped $1.26, or 10.36%, to close at $27.23.

Shares of Berkshire Hathaway (NYSE: BRK.A) crept up by $900.00, or 0.66%, to $137,900.00.

Take-Two to fly solo

Take-Two took to the road and left deal-land as a bachelor game designer.

After a drawn-out and failed deal to merge with Electronic Arts, the company "has determined that it is in the best interests of stockholders to conclude its review of strategic alternatives and to continue operating and building Take-Two as an independent company," the company said in a press release.

Take-Two consistently rejected EA's $25.00-per-share and $25.74-per-share offers but always maintained that it would be willing to sell for the right price.

Now the company feels as though it is "strongly positioned creatively, financially and competitively to benefit from the opportunities we see in the fastest growing segment of the entertainment industry," Strauss Zelnick, Take-Two's chairman, said in a statement.

Shares of Take-Two (Nasdaq: TTWO) dropped $1.07, or 6.72%, to $14.86.

Hexion to separate from epoxy

Hexion agreed to accept a FTC ruling that requires it to divest its specialty epoxy resin business.

With the antitrust hurdle cleared, Hart-Scott-Rodino and European Union approvals are expected for the $28.00-per-share merger.

Shares of Huntsman (NYSE: HUN) sank $1.26, or 10.36%, to end at $10.90.

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