Synaptics Buyout Revised
Onsemi amends its agreement to acquire Synaptics in a $5.7 billion cash deal.
Anonymous
Key Points
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The U.S. Federal Trade Commission had approved the transaction, while regulators in other jurisdictions were still reviewing it.
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Onsemi said the revised deal is expected to be immediately accretive to its non-GAAP earnings per share after closing.
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The amended agreement adds opportunities for revenue synergies and for onsemi to insource some Synaptics production, beyond the previously announced $200 million in annual run-rate synergies.
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Wells Fargo downgraded Synaptics to Equal-weight from Overweight after the amended merger agreement was announced.
Onsemi agreed to buy Synaptics in an all-cash deal worth $5.7 billion, offering $123 per share. IBTimes reported the revised terms replace a prior all-stock agreement valued at roughly $7 billion and came after an unsolicited competing bid surfaced. Synaptics' board unanimously approved the deal, sending its shares up 14% as investors embraced the higher, fixed-value offer.
The all-cash structure removes uncertainty that plagued the original stock deal. TradingView noted Onsemi expects the transaction to close by mid-2027, pending regulatory approval. The Federal Trade Commission already approved it. Onsemi said the deal will boost earnings per share immediately after closing and unlock $200 million in annual synergies, plus new opportunities to insource Synaptics production.
Why Onsemi Switched From Stock to Cash
The original all-stock deal valued Synaptics at roughly $7 billion. When an unsolicited competing offer emerged, Onsemi moved fast to win the auction. The $5.7 billion all-cash bid at $123 per share locked in certainty for Synaptics shareholders, eliminating the risk that Onsemi's stock price could sink before closing. StocksToTrade reported Synaptics shares jumped 15% as investors cheered the fixed-value structure.
Regulatory Path Clear in Some Markets
The U.S. Federal Trade Commission has already given its blessing to the deal. Regulators in other jurisdictions remain in review mode. Onsemi and Synaptics expect the transaction to wrap up by mid-2027, giving foreign authorities time to weigh in. The cash structure may actually ease regulatory concerns since there's no dilution to Onsemi shareholders on the table.
Onsemi Sees Production Synergies Beyond Cash Savings
Onsemi previously projected $200 million in annual run-rate synergies from the Synaptics deal. The amended agreement opens doors to more gains. TradingView reported Onsemi can now insource some Synaptics manufacturing, cutting costs and boosting margins. The company also identified new revenue synergy opportunities, though it hasn't disclosed dollar amounts yet.
SeekingAlpha noted that Wells Fargo downgraded Synaptics to Equal-weight from Overweight after the amended deal was announced. The bank flagged concerns that the new terms might limit upside for shareholders between now and closing in mid-2027.
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