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Investing.com -- Shares of Allegro (WA:ALEP) MicroSystems (NASDAQ:ALGM) soared by 10% amid reports that ON Semiconductor (NASDAQ:ON) is considering a takeover of the company.
The stock movement reflects market optimism following a Bloomberg report over the weekend, which suggested that ON Semiconductor is working with advisors on a potential deal. Additionally, the possibility of competitive suitors or bids for ALGM has contributed to the positive sentiment among investors.
The report has sparked interest as Allegro MicroSystems, known for its leadership in Magnetic sensing for Autos/EVs/ADAS (e-Mobility), possesses a robust product portfolio that is attractive to potential acquirers.
The company’s strong CPV figures, which reach approximately $40 for internal combustion engine vehicles and can exceed $120 for 800V electric vehicles, highlight its significant role in the automotive industry. Allegro’s offerings also extend to low-power, small-footprint PowerIC/gate driver ICs for industrial and data center applications.
Analysts from Mizuho (NYSE:MFG) commented on the situation, stating, "We believe a fabless ALGM’s strong CPV (~$40 for ICE and up to $120+ for 800V EVs), leadership position in Magnetic sensing for Autos/EVs/ADAS (e-Mobility), and strong low-power small-footprint PowerIC/gate driver IC portfolio for industrial/Data Center, make it an attractive target in a deal with ON or another analog supplier."
They further elaborated on the potential benefits to Allegro MicroSystems if acquired, including expansion in the auto sector with magnetic sensors and new opportunities in medical, solar, and data center markets.
The analyst quote also addressed the financial aspect of such deals, noting, "We believe typical take-out premiums in Semis come in at 30-40% over prior 52-weeks of trading in the last 4-5 years."
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