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Allegro MicroSystems Rejects Onsemi’s $6.9 Billion Takeover Offer

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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.

Nvidia Surpasses Apple to Become World’s Most Valuable Company Amid AI Chip Demand Surge

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Nvidia briefly overtook Apple as the world’s most valuable company on Friday, fueled by a record-setting rally in its stock, largely driven by demand for its AI-focused chips. Nvidia’s market value briefly hit $3.53 trillion, slightly outpacing Apple’s $3.52 trillion before settling near Apple’s valuation. This is the second time this year that Nvidia has reached the top spot, previously contending with Apple and Microsoft for global market cap dominance.

The Silicon Valley chip giant’s stock has surged about 18% in October alone, spurred in part by OpenAI’s recent $6.6 billion funding announcement, which renewed optimism for AI technology. Nvidia, originally known for gaming processors, is now the preferred supplier of AI chips in a market led by Microsoft, Alphabet, Meta, and other tech titans. This week, further gains were prompted by Western Digital’s strong quarterly performance, indicating strong demand from data centers.

Amid these successes, Apple faces lukewarm iPhone sales, with a slight dip in China as Huawei’s sales grew 42%. Apple’s Q3 revenue is projected to rise 5.5% year over year to $94.5 billion, compared to Nvidia’s anticipated 82% jump to $32.9 billion, reflecting the rapid growth in AI adoption. Nvidia’s shares, now 190% higher this year, have gained significant traction in the options market, with bullish investors banking on sustained AI demand.

Dell and Palantir to Join S&P 500; Shares Surge

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Dell and Palantir both saw their shares jump about 7% in after-hours trading on Friday following the announcement from S&P Global that they will be added to the S&P 500 index. Palantir will replace American Airlines, while Dell will take the place of Etsy in the benchmark index.

This move marks Dell’s return to the S&P 500, having been a member from 1996 to 2013 before going private and rejoining the public market in 2018. For Palantir, which went public in 2020 after over 15 years as a venture-backed startup, this inclusion highlights its recent profitability and growing revenue. The company reported a net income of $135.6 million for the second quarter, a significant increase from the previous year.

The inclusion of these companies reflects their high market capitalizations—Palantir’s exceeds $67 billion, while Dell’s is over $72 billion—matching the median market cap of S&P 500 companies at approximately $33.5 billion. The addition often leads to a rally in stock prices as index-tracking funds adjust their portfolios to include the new members.

Dell’s stock had already surged 90% in 2023, driven by strong demand for AI servers. Meanwhile, Palantir, known for its data analytics and work with government and military agencies, has seen accelerated revenue growth and posted its first profits in late 2022.

The S&P 500 additions are intended to better represent U.S. stocks with high market caps. The inclusion of these companies follows recent changes, such as the addition of cybersecurity firm CrowdStrike in June. Shares of software maker Workday fell 2% in after-hours trading, despite earlier speculation about its potential inclusion in the index.