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Shares of Cypress Semiconductor Corp. (NASDAQ: CY) traded down nearly 6% early Monday morning following an exclusive report from Reuters over the weekend that the company is preparing to offer a bid for Atmel Corp. (NASDAQ: ATML) that would be better than the September 20 stock and cash offer worth $4.6 billion from Dialog Semiconductor. As Reuters noted, if Cypress, with a market cap of around $2.9 billion, can manage such a deal it would be “transformational.”

It seems that the 55% stock portion of Dialog’s offer is not worth as much now as it was when it was first made. Dialog’s stock dropped nearly $9 a share on the day of the announced offer and hasn’t recovered yet. That leaves an opportunity for a disruptive bid and that, apparently, is an opportunity that Cypress is expected to take.

Analysts at Canaccord Genuity looked at the Dialog offer shortly after the announcement and had this to say:

Despite the initial negative investor reaction to the deal, we believe the merger both diversifies each company’s revenue stream, adds scale, and should yield compelling cost synergies once completed. The merger would position the combined company as #1 supplier of mobile power management solutions in addition to having a strong IoT [Internet of Things] portfolio of 8- and 32-bit MCUs, connectivity, touch sensors and crypto memory to pursue broad IoT and automotive design wins. … We had previously valued Atmel shares at $8 and believe the scale, diversification, and cost synergies resulting from this transaction should deserve a premium despite the market reaction.

True to its beliefs, Canaccord Genuity raised its price target on Atmel shares to $9.50, a price the shares haven’t come close to since the offer was made. At the time Dialog made its offer, a share of Atmel was valued at around $10.42.

Raymond James raised Atmel to a Strong Buy Monday morning with a price target of $10.

Atmel stock traded at around $8.27 in the noon hour Monday. The stock’s 52-week range is $5.84 to $10.50. The high was posted in late June.

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