ON Semiconductor (NASDAQ: ON) has agreed to acquire Synaptics Incorporated (NASDAQ: SYNA), a company specializing in semiconductors for smart devices, in an all-stock transaction valuing Synaptics at approximately $6.2 billion.
According to a company statement, Synaptics shareholders will receive 1.35 shares of ON Semiconductor common stock for each share they own. Based on the closing prices of both companies over the last ten trading days, this represents a premium of about 19%.
The total enterprise value, including debt, is approximately $7 billion. The deal is expected to close by mid-2027, pending necessary approvals.
This move follows ON Semiconductor's decision a year ago to abandon a $6.9 billion effort to acquire Allegro MicroSystems Inc., after determining there was "no viable path" to a deal.
Regarding the latest target, the company stated it aims to expand its business beyond power and sensing into intelligent systems.
ON Semiconductor CEO Hassane El-Khoury said in the statement, "As AI moves out of the cloud and into the physical world, including automotive and industrial, the next phase of innovation will rely on systems that can sense, decide, act, and adapt in real-time."
In an interview, El-Khoury added, "From a technology perspective, the complementarity of our product portfolios is what makes this transaction so exciting for us."
Both ON Semiconductor and Synaptics independently reaffirmed their financial outlooks. In after-hours trading at 5:15 p.m. New York time, ON Semiconductor shares fell 8.2%, while Synaptics shares rose 12%.
El-Khoury stated in the interview that ON Semiconductor expects the acquisition of Synaptics to be accretive within 18 months of the deal's completion.
He noted the acquisition would likely lead to job cuts, predicting that "the majority of those will be on the OpEx side."
"Our focus is on preserving R&D primarily," El-Khoury said, to concentrate on new product development.
Morgan Stanley and J.P. Morgan Securities served as financial advisors to ON Semiconductor, with Skadden, Arps, Slate, Meagher & Flom acting as legal counsel. Qatalyst Partners served as financial advisor to Synaptics, with Baker McKenzie providing legal counsel.
When asked if ON Semiconductor is targeting more M&A deals, El-Khoury responded, "Because this is a stock transaction, we have plenty of flexibility on our balance sheet."