Onsemi Abandons $6.9 Billion Acquisition of Allegro MicroSystems
In a surprising turn of events, U.S chipmaker Onsemi announced on Monday that it was withdrawing its $6.9 billion offer for Allegro MicroSystems, a month after the semiconductor solutions provider rejected the latest bid from its larger rival. The news came as a shock to industry insiders, who had been closely following the potential merger between the two companies.
Background of the Merger
Onsemi first expressed its interest in acquiring Allegro MicroSystems in November 2020, offering $110 per share. However, Allegro’s board of directors rejected the offer, stating that it significantly undervalued the company. Onsemi then increased its offer to $135 per share in December, but Allegro still refused to negotiate.
Reason for Onsemi’s Decision
Onsemi did not disclose the reason for its decision to withdraw the offer. However, industry analysts speculate that the prolonged negotiation process and Allegro’s unwillingness to engage in talks may have contributed to Onsemi’s change of heart. Moreover, the ongoing global semiconductor shortage and the increasing competition in the industry may have made Onsemi reconsider the merger’s potential benefits.
Impact on Onsemi
Onsemi’s decision to abandon the acquisition may have both positive and negative implications for the company. On the one hand, it allows Onsemi to focus on its existing business and product development, which may help it better compete in the semiconductor market. On the other hand, the failed acquisition may also dampen investor sentiment and negatively impact Onsemi’s stock price.
Impact on Allegro MicroSystems
Allegro MicroSystems, on the other hand, may benefit from Onsemi’s withdrawal of the offer. The company’s stock price surged after the news, indicating that investors believe Allegro is now a more attractive acquisition target for other companies. However, the company may also face increased pressure to deliver strong financial results to justify its standalone value.
Impact on the Semiconductor Industry
The failed merger between Onsemi and Allegro MicroSystems may have wider implications for the semiconductor industry. It may signal a slowdown in M&A activity in the sector, as companies become more cautious about the potential risks and challenges of acquisitions. Additionally, it may also lead to increased competition between Onsemi and Allegro in the automotive and industrial markets.
Conclusion
In conclusion, Onsemi’s decision to abandon its $6.9 billion offer for Allegro MicroSystems marks a significant development in the semiconductor industry. While the reasons for Onsemi’s withdrawal are not yet clear, the failed acquisition may have both positive and negative implications for both companies and the industry as a whole. Only time will tell how this development will shape the competitive landscape in the semiconductor market.
- Onsemi withdraws $6.9 billion offer for Allegro MicroSystems
- Allegro MicroSystems rejected Onsemi’s latest offer in December
- Industry analysts speculate that prolonged negotiation process and Allegro’s unwillingness to engage in talks may have contributed to Onsemi’s change of heart
- Onsemi may now focus on its existing business and product development
- Allegro MicroSystems may be a more attractive acquisition target for other companies
- The failed merger may signal a slowdown in M&A activity in the semiconductor sector
- The failed merger may lead to increased competition between Onsemi and Allegro in the automotive and industrial markets
