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Allegro Stock Jumps as Chip Maker Rejects Onsemi’s $35.10 Per Share Bid
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Shares of power chips maker Allegro Microsystems ( ALGM ) jumped Thursday in intraday trading after it rejected the latest bid by its larger rival ON Semiconductor ( ON ), also known as Onsemi, describing the offer as "inadequate."
Onsemi shares slumped.
Onsemi offered $35.10 per share for Allegro, up from a September proposal of $34.50, it said in a statement Wednesday, valuing the smaller company at an implied enterprise value of $6.9 billion, the company said Wednesday. Allegro responded to that offer by saying it had reviewed the bid and “determined that the proposal was inadequate.”
In its statement, Onsemi CEO Hassane El-Khoury said he believed a merger between the two would bring “two highly complementary businesses together.”
“The Allegro team has built an impressive leadership position in magnetic sensing and power IC s for the automotive and industrial end-markets,” he noted, which, combined with onsemi’s technologies could create a "diversified leader in automotive, industrial and AI data center applications.”
Onsemi last month posted fourth-quarter results and missed profit, sales, and guidance estimates as it said it faced difficult macroeconomic conditions. Its shares are down around 5% Thursday and have lost more than 40% of their value in the past 12 months. Allegro shares are up almost 8% Thursday.
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