UK-based, Germany-listed Dialog Semiconductor PLC is buying US-based adversary Atmel Corp. in a deal worth $4.6 billion.

Dialog Semiconductor PLC announced that the company was going to acquire Atmel Corp. for about $4.6 billion. In fact, it can be considered the latest sign that chipmakers are betting on a technology trend called the Internet of Things.

Dialog Semiconductor CEO Jalal Bagherli commented: “Our new, enlarged company will be a diversified, high-growth market leader in mobile power, IoT and automotive. We firmly believe that by combining power management, microcontrollers, connectivity and security technologies, we will create a strong platform for innovation and growth in the large and attractive market segments we serve,” states Light Reading.

Plus, Dialog Semiconductor, being heavily exposed to Apple and Samsung, is convinced that the deal would diversify its customer base in automotive markets as well as network-connected chips used in industrial gear, also known as the “Internet of Things,” reports CNBC.

“This transaction combines two successful companies and will create significant value for Atmel and Dialog shareholders, customers and employees. Adding Dialog’s world-class capabilities in Power Management with Atmel’s keen focus on Microcontrollers, Connectivity and Security will enable Dialog to more effectively target high-growth Applications within the Mobile, IoT and Automotive markets,” added Steven Laub, Atmel President and Chief Executive Officer.

In a nutshell, the two firms’ boards support the deal. It’s expected to be completed in the first quarter of 2016 after being approved by regulators and shareholders. However, Atmel said last month it was considering strategic options, and China Electronics Corp. was said to have held preliminary talks to acquire Atmel, reads Bloomberg Business.

“We passed the computing era, we’re at the height of the mobile era, and we’re about to enter the IOT era,” said Mr.Bagherli in a phone interview. “Companies are trying to position themselves.”

According to Bloomberg, Atmel investors are going to get $4.65 in cash and 0.112 of a Dialog American depository share for each stock. Dialog plans to finance the purchase with a combination of existing cash, $2.1 billion in new debt and 49 million American depository shares, or about 38 percent of the enlarged company’s issued share capital.

“The rationale for our acquisition is to build a complementary business to power savings and power management and it gives us a better platform for the ‘Internet of Things’,” Jalal Bagherli said in an interview. It’s probable that the deal will boost Dialog’s underlying earnings starting in 2017 allowing the company to save $150 million within two years.

As for the chipmakers, Dialog Semiconductor PLC launched as the European business of International Microelectronic Products Inc., a chip company created in Silicon Valley in the 1980s. Subsequent investors and backers included such companies as Daimler Benz AG and Ericsson AB. The company held its IPO in Frankfurt in 1999 and returned to profitability in 2008 on the back of demand for mobile devices.

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