The deal is expected to be finalised in the fourth quarter of 2004, subject to approval by both sets of shareholders and regulatory bodies, ARM said in a statement.

Under the terms of the agreement, Artisan stockholders will receive 9.60 dollars in cash and ARM stock equal to 4.41 ARM American Depository Shares (ADS) for each outstanding Artisan share.

ARM said that based on Friday's closing price for ARM's ADS the offer is worth 33.89 dollars per share.

This represents a 42-percent premium to Artisan shares' closing level on Friday.

The price of shares in ARM tumbled 14.7 percent to 85.75 pence in early deals Monday, a fall blamed on the huge premium the company has paid to acquire its US peer, dealers said.

ARM said the purchase of Artisan, which makes components for the design and manufacture of microchips, would enable the combined company to take advantage of growth opportunities across multiple industries as system design complexity increases.

"Combining forces with Artisan will enrich and expand our total IP (intellectual property) offering," ARM chief executive Warren East said.

Artisan posted sales of 82.9 million dollars and profit after taxes of 17.3 million dollars in the year to end-June 2004.

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