Atmel Corporation (ATML) recently completed the previously announced sale of its Smart Card (SMS) business based in Rousset, France and East Kilbride, U.K. to INSIDE Contactless for $32 million and an additional cash consideration of up to $21 million if certain earn-out targets are met in 2010 and 2011.
SMS business generated sales of approximately $27 million in the second quarter of 2010. As part of the proposed transaction, Atmel would make a minority investment of $4 million in INSIDE and entered into a royalty-based intellectual property license agreement to support current and future SMS products.
With the sale of its SMS business, Atmel successfully divested or closed 15 non-core product lines or businesses since early 2007. Management has been taking steps to streamline its workforce and improve profitability in response to the challenging economic environment.
These actions include selling non-core wafer fabrication operations, consolidating or eliminating numerous product lines and reducing the workforce. The sale of non-core businesses has led to a 35% reduction in the employee base. Concurrent with the SMS business sale, approximately 160 employees were transferred to INSIDE.
This transaction follows Atmel’s sale of its wafer fabrication operation in Rousset, France, to LFoundry GmbH, which closed during the second quarter of 2010. The sale of the Rousset manufacturing operation marks a significant step in Atmel’s transformation to a “fab-lite” supply chain structure with lower fixed costs. Atmel has already reduced its wafer fabrication facilities from five to one.

Atmel is focusing on its core Microcontroller business and is halting development in non-core areas. In keeping with this goal, Atmel earlier announced its intention to seek strategic alternatives for its ASIC business and related manufacturing assets, including a potential sale. The ASIC business is a leading provider of high-performance, customer-specific integrated circuits and security solutions to the industrial, military, aerospace and consumer markets. However, the business is no longer consistent with the company’s long-term strategy of building itself as a microcontroller-based company.
 
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