Allegro MicroSystems (ALGM.O), a semiconductor solutions provider, has rejected a $6.9 billion takeover offer from Onsemi (ON.O), deeming the proposal “inadequate.” Onsemi’s offer of $35.10 per share, made public on Wednesday, was seen as insufficient by Allegro’s board, which had previously turned down an offer from Onsemi priced at $34.50 per share.
Allegro, based in New Hampshire, confirmed it had received the offer in February and after careful review, decided to reject it. The company did not elaborate further on the rejection. Onsemi, for its part, did not respond to requests for comment on the matter.
Onsemi’s bid came as part of its strategy to weather the ongoing slump in automotive chip demand, but Allegro, which supplies power management systems for both electric vehicles (EVs) and traditional vehicles, is expected to avoid the same market weakness. Allegro has also recently appointed Mike Doogue as CEO, with expectations that the company will return to revenue growth following nearly five quarters of decline, according to data from LSEG.
Onsemi had planned to fund the acquisition through a mix of committed financing, cash, and a revolving credit facility. The offer represented a 31% premium over Allegro’s closing stock price on Wednesday. Allegro’s shares had surged 22% earlier in the week following reports of Onsemi’s interest in a takeover.
With a market capitalization of approximately $4.93 billion, Allegro remains an attractive target for potential acquirers despite rejecting the current offer.