Onsemi’s $6.9B Bid for Allegro Rejected as "Inadequate"

Onsemi (NASDAQ: ON) has made a $6.9 billion acquisition offer for Allegro Microsystems Inc. (NASDAQ: ALGM), but the latter’s board has deemed the bid "inadequate."

The semiconductor giant offered $35.10 per share in cash, representing a 31.1% premium over Allegro’s last closing price. The deal values Allegro at $6.9 billion in enterprise value, including $6.4 billion in equity. Onsemi, formerly ON Semiconductor, emphasized the strategic synergy between the companies, highlighting Allegro’s strength in automotive and industrial markets—sectors Onsemi also serves.

Allegro, valued at $4.91 billion based on Wednesday’s close, rejected the proposal, signaling it may seek a higher valuation. The offer follows recent reports that Onsemi was eyeing Allegro for a takeover, which had already fueled a rally in Allegro’s shares.

Both companies have struggled with declining stock prices due to weakened automotive demand. Onsemi’s shares have dropped 40% over the past year, while Allegro is down 9%. The bid also comes as Onsemi undergoes a major restructuring following weaker-than-expected earnings. The company is likely pursuing consolidation to strengthen its position amid the ongoing U.S.-China trade war and a sluggish semiconductor market.

The rejection leaves Onsemi at a crossroads—whether to sweeten its bid or explore other acquisition targets. Investors now await Allegro’s next move, as the semiconductor industry continues to navigate economic uncertainties.