China Electronics in talks to buy Atmel

China Electronics Corp, the nation's largest State-owned information technology company, is in preliminary talks to acquire United States-based Atmel Corp, according to industry sources.

CEC is believed to be discussing a bid for Atmel, a maker of chips used in industrial machinery and cars, at about $8.5 a share. Atmel shares closed at $8.18 in New York trading on Wednesday, down from a high of $10.44 in June, giving the California-based company a market value of about $3.4 billion. There is no guarantee a deal will get done, and talks may still fall apart.

The thin premium being discussed and the regulatory scrutiny that would come with a Chinese buyer raise the risks that a deal might not materialize, according to one source.