Allegro MicroSystems Receives Buyout Offer from Onsemi

Allegro MicroSystems has received a buyout offer from Onsemi for $35.10 per share, a 57% premium over its previous share price. However, Allegro's Board has deemed the proposal inadequate, which could lead to potential impacts on its stock prices.

Date: 06-03-2025

AI Rating: 6

Buyout Offer and Stock Valuation
Allegro MicroSystems, Inc. confirmed an unsolicited buyout offer from ON Semiconductor Corp. at $35.10 per share in cash. This buyout proposal represents an implied enterprise value of $6.9 billion. It is significant due to the 57% premium compared to Allegro's closing price of $26.78 before the offer, indicating that Onsemi views Allegro's value much higher than current market perceptions.

Despite the premium, Allegro's Board of Directors deemed the offer inadequate, which suggests that they may anticipate a higher valuation or strategic benefits from remaining independent. This refusal to negotiate may create volatility in Allegro's stock, especially as the market reacts to the Board's decision and investors reassess the company's future prospects.

Onsemi's strategic rationale for this acquisition emphasizes a combination of both companies' strengths in automotive and industrial markets. However, the immediate market reaction has shown some decline in Allegro's stock in after-market hours, highlighting investor uncertainty around the acquisition's likelihood and its implications for share value moving forward.

Overall, while the buyout offer has created a favorable short-term spike in Allegro's stock due to the acquisition premium reflected, the rejection signals a complex narrative that could lead to fluctuations until a resolution is reached.

Stocks: ALGM ON