Microchip Technology Inc. says it has a deal to acquire rival chipmaker Atmel for roughly $3.56 billion in cash and stock. Atmel Corp., which is based in San Jose, California, said it broke off its merger with Dialog Semiconductor from September. It called Microchip's offer "superior."

Microchip and Atmel say their agreement is worth $8.15 per share, or $3.4 billion, excluding $155 million in Atmel's cash and investments. The deal has been approved by each company's board of directors and is expected to close in the second quarter. It still needs the backing of Atmel's stockholders. Microchip said the combined company is expected to generate $170 million in savings and increased revenue beginning in fiscal 2019. Chandler, Arizona-based Microchip makes semiconductors used in a variety of computers and electronic devices.