“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming,” the companies said in a joint statement.
According to takeover rules, Switzerland-listed AMS must by 24 July either announce a firm intention to make an offer for Dialog or announce that it does not intend to do so.
A merger of the two could create an entity with combined annual sales of about €730m. Some 70 per cent of Dialog’s roughly €660m in revenue comes from Apple, which some analysts say makes it too dependent on a single customer.
The companies did not provide financial details in their statement.
Kepler Cheuvreux analyst Bernd Laux said in a note to clients that AMS’ sensors were the key missing part for Dialog to supply complete modules.
AMS shares initially rose as much as seven per cent during morning trading, but closed down 1.4 per cent at SFr143.60. Dialog shares closed up nearly two per cent on the news at €24.55.