onsemi (NASDAQ: ON) has announced its proposal to acquire Allegro MicroSystems (NASDAQ: ALGM) in an all-cash deal valued at $35.10 per share, representing a 57% premium to Allegro’s closing price on February 28, 2025. The potential acquisition aims to create a formidable force in the automotive and industrial markets by leveraging the strengths of both companies in intelligent power and sensing technologies.
Having made several attempts over the past six months to enter into constructive discussions to acquire Allegro, the last proposal onsemi submitted was on February 12, 2025.
The strategic rationale behind the acquisition underscores a complementary fit between onsemi and Allegro. Allegro’s product portfolio aligns seamlessly with onsemi’s leadership in power and sensing solutions, particularly for automotive, industrial, and AI-driven data centers. The merger would unite two innovation-driven teams, offering expanded development opportunities while enhancing customer solutions and employee growth prospects.
For Allegro shareholders, the proposal offers immediate and certain value. The significant premium on the stock price reflects onsemi’s confidence in the long-term potential of the combined entity. If successful, the deal would strengthen onsemi’s position in key markets and accelerate technological advancements in power management and sensor applications.
onsemi has outlined a clear path to completing the acquisition, backed by a team of experienced advisors. The company has committed to expediting due diligence and negotiating a definitive agreement without anticipated financing contingencies. The transaction would be funded through a mix of committed financing, cash reserves, and funds from its existing revolving credit facility.
“We believe the combination of onsemi and Allegro would bring two highly complementary businesses together, benefitting our respective customers and delivering immediate value to Allegro shareholders,” said Hassane El-Khoury, President and Chief Executive Officer of onsemi. “The Allegro team has built an impressive leadership position in magnetic sensing and power ICs for the automotive and industrial end-markets. Together, Allegro’s unique product portfolio and onsemi’s differentiated intelligent power and sensing technologies would create a diversified leader in automotive, industrial and AI data center applications.”
El-Khoury continued, “While we would have preferred to reach an agreement with Allegro privately, the decision to make our proposal public reflects our conviction in the merits of a combined company, which we believe is in the best interests of Allegro and onsemi shareholders. We urge the Allegro Board and management team to engage in good faith discussions with onsemi’s management team regarding the proposed transaction, which maximizes value for Allegro shareholders.”
