Atmel has entered into a definitive agreement to sell its Smart Card (SMS) business based in Rousset, France and East Kilbride, UK to Inside Contactless. Inside will pay $37 million in cash at the closing, subject to a post-closing working capital adjustment and an additional cash consideration of up to $21 million if certain earnout targets are met in 2010 and 2011. As part of the transaction, Atmel has agreed to make a minority investment in Inside of approximately $4 million.

The definitive agreement also provides Inside a royalty-based, non-exclusive license to certain business-related intellectual property in order to support the current SMS business and future product development. In addition, Inside will enter into a multi-year supply agreement to continue sourcing wafers from the fabrication facility in Rousset, France that Atmel recently sold to LFoundry GmbH. The transaction is expected to close by the end of the third quarter of 2010.