Dialog Semiconductor PLC said Thursday that it wouldn't increase its buyout offer for Atmel Corp., which earlier this week said a rival bid from Microchip Technology Inc. was superior.

Dialog, as a result of Atmel backing out of their merger agreement, is expected to receive a termination fee of $137.3 million.

On Wednesday, San Jose-based Atmel said an unsolicited offer from fellow chip maker Microchip Technology was a "superior proposal" and notified U.K.-based Dialog it intended to terminate their September merger agreement.

Microchip's cash-and-stock offer for Atmel is valued at $8.15 a share, with $7 in cash and $1.15 in stock.

Dialog's offer, made in September, included $4.65 in cash and 0.112 of a Dialog American depositary share for each Atmel common share. That deal was valued at about $4.6 billion when it was announced. Since then, Dialog's shares have slumped by about 40%.

Dialog, which had faced opposition to the deal from shareholder Elliott Management, had until Tuesday to raise its offer.

Atmel is best known for chips called microcontrollers that provide computing power for many kinds of consumer and business hardware.

Dialog, spun off from German luxury-car maker Daimler-Benz AG in 1999, sells chips used to manage power in high-end smartphones, including those made by Apple Inc.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

January 14, 2016 16:25 ET (21:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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