Onsemi Publicly to Bid $6.9B for Allegro

Onsemi has officially launched a $6.9 billion acquisition bid for Allegro Microsystems, a leading developer of sensor integrated circuits. This offer includes Allegro's outstanding debt and represents a strategic move by Onsemi to strengthen its position in the semiconductor industry.

The proposed acquisition price stands at $35.10 per share, surpassing the previous offer of $34.50 made in September 2024. Reports indicate that Onsemi has been working with advisors for several months to finalize this deal.

In an official statement, Onsemi CEO Hassane El-Khoury emphasized the strategic value of the acquisition, stating that the merger will bring together two highly complementary companies, enhancing innovation and market competitiveness.

Hostile takeover bids are uncommon but have been used as a strategic approach in the semiconductor industry. A notable example occurred in 2017 when Broadcom attempted a $103 billion acquisition of Qualcomm, a deal that was ultimately blocked with White House intervention.

Following the announcement, Allegro's stock surged by 7% in New York trading, bringing its market capitalization to approximately $4.9 billion. Meanwhile, Onsemi's shares rose by 4.5%, reaching $46.49 and valuing the company at $19.6 billion.

As part of the acquisition, Onsemi will assume Allegro's debt, which stood at approximately $507 million as of December 27, 2024. Onsemi's financial position includes $2.69 billion in cash and cash equivalents as of December 31, 2024, while its total liabilities, including long-term debt, amount to $5.26 billion.

In leadership changes, Allegro recently announced that longtime executive Mike Doogue will take over as company president and CEO, succeeding Vineet Nargolwala, who has led the company for nearly three years.

Allegro specializes in advanced semiconductor solutions, particularly for motion control and power-efficient systems. Its products are widely used in automotive engine and safety systems, as well as in data centers and industrial automation. Similarly, Onsemi focuses on power and sensing technologies for applications in automotive, industrial, and cloud computing sectors.

Allegro's largest shareholder, Japan's Sanken Electric, holds approximately 32% of the company's shares.

Industry analysts have cautioned that automotive chipmakers may face headwinds as a potential slowdown in the U.S. electric vehicle market looms. Additionally, Onsemi has announced a global restructuring initiative aimed at optimizing operational costs, which includes a planned workforce reduction of approximately 2,400 employees across its business units by 2025. In February, the company projected first-quarter revenue below Wall Street expectations due to weakening demand for automotive chips.