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Investing.com-- Onsemi (NASDAQ:ON) offered to buy smaller semiconductor peer Allegro Microsystems Inc (NASDAQ:ALGM) on Wednesday, although the latter said the deal was "inadequate."
Onsemi, formerly known as ON Semiconductor , offered $35.10 per share in cash from Allegro (WA:ALEP), representing a 31.1% premium to the latter’s close on Wednesday. The deal is at an enterprise value of $6.9 billion, of which $6.4 million is equity.
Allegro was valued at $4.91 billion based on its Wednesday close. Onsemi was worth nearly $20 billion.
Responding to the deal, Allegro said its board had evaluated Onsemi’s offer and found it to be "inadequate."
Onsemi said the deal would bring “two highly complementary businesses together,” lauding Allegro’s offerings in the automobile and industrial markets. Onsemi also develops chips and electronic components for industrial, automobile, and defense purposes.
Onsemi’s Wednesday offer comes just days after Bloomberg reported the company was seeking to take over Allegro. The latter’s shares had rallied on the report.
Wednesday’s deal comes as both companies grapple with sharp declines in their stock prices amid weak automobile demand. Onsemi is trading down about 40% in the past 12 months, while Allegro is down 9%.
Onsemi had recently enacted a sweeping restructuring plan after it clocked weaker-than-expected quarterly earnings. The company is also likely seeking consolidation to help it better weather a decline in global automobile demand, especially in the face of a U.S.-led trade war.