Synaptics Stock Soars 14% as Onsemi Switches to $5.7 Billion All-Cash Buyout After Rival Proposal Surfaces

NEW YORK — Shares of Synaptics Inc. jumped more than 14% at the open Friday after onsemi agreed to buy the chipmaker in an all-cash deal valued at about $5.7 billion, replacing an earlier all-stock agreement. The revision followed the emergence of an unsolicited proposal from another company.

Synaptics stock rose $15.37, or 14.48%, to $121.52 shortly after the opening bell on the Nasdaq. The price moved close to the $123-per-share cash offer.

Shares of onsemi, formally ON Semiconductor Corp., also gained, rising more than 6% in premarket trading as investors welcomed the new terms.

From stock to cash

Under the amended agreement, announced late Thursday, onsemi will pay $123 in cash for each Synaptics share. The deal values the company at about $5.7 billion.

The companies first agreed to the merger on June 25 in an all-stock deal. Under those terms, Synaptics shareholders were to receive 1.350 onsemi shares for each share they held. The transaction was valued at about $7 billion at the time.

The new price is well above Synaptics' previous close of $106.15. The cash structure also gives shareholders a fixed value that no longer depends on movements in onsemi's stock price.

"By transitioning to an all-cash structure, we are providing value certainty at a meaningful premium as compared to current value," Synaptics CEO Rahul Patel said.

Synaptics' board unanimously determined that the revised terms are in the best interests of shareholders.

Competing interest prompted changes

The amendment followed an unsolicited, non-binding proposal that Synaptics received from an unnamed strategic party on Sept. 2. The companies said the approach led both boards to renegotiate the structure and price of the deal.

The identity of the other bidder and the terms of its proposal were not disclosed.

The disclosure of competing interest added to investor enthusiasm, signaling demand for Synaptics' business and lending support to the revised valuation.

Financing secured

Onsemi has secured fully committed debt financing of about $2.45 billion from Morgan Stanley to help fund the deal. The amended merger agreement does not include a closing condition tied to financing, reducing the risk that the deal could fall apart if funding conditions change.

The transaction has already received antitrust clearance in the United States. The companies expect to complete the deal by mid-2027, subject to approval by Synaptics shareholders and remaining regulatory approvals.

Synaptics filed a proxy statement Friday with details for shareholders ahead of a vote on the deal.

Why onsemi investors cheered

Onsemi shares, which closed Thursday at $80.08, rose sharply in premarket trading as investors focused on several advantages of the revised terms.

The new deal carries a lower overall price than the original stock agreement and avoids issuing new onsemi shares, which would have diluted existing shareholders. Onsemi has also said the acquisition is expected to add to its adjusted earnings per share immediately.

The company has pointed to potential revenue synergies and plans to bring some of Synaptics' production in-house, which could improve efficiency.

Baird analyst Tristan Gerra maintained a hold rating on onsemi with a $108 price target following the announcement.

About the companies

San Jose, California-based Synaptics designs chips and software for human interface and connectivity products, including touch, display, audio and wireless technologies used in consumer electronics, automotive systems and Internet of Things devices.

Onsemi, based in Scottsdale, Arizona, makes power and sensing semiconductors used heavily in automobiles, industrial equipment and energy infrastructure. Acquiring Synaptics would broaden its offerings in connectivity and edge processing for industrial and automotive markets.

Synaptics reported revenue of about $1.2 billion over the past 12 months. Its shares have traded between $58.28 and $149.11 over the past year.

Chip stocks rally

The deal news came amid a broader rally in semiconductor stocks. Shares across the sector were lifted after memory chipmaker Micron Technology reported blowout quarterly results earlier this week, and Treasury yields eased from multidecade highs.

Merger arbitrage

With Synaptics trading just below the $123 offer, the small gap reflects the time remaining until the deal closes and the risk that it could fail to win final approvals. Some investors may also be weighing whether the unnamed bidder could return with a higher offer, though nothing in the companies' announcements suggested a new bid was expected.

Synaptics shareholders will vote on the amended agreement in the coming months. Investors will watch for any further moves from the unidentified suitor and for progress on the remaining regulatory approvals as the companies work toward closing the deal by mid-2027.