ON Semiconductor Climbs After Replacing Its $7 Billion Stock Bid With a $5.7 Billion Cash Synaptics Offer

NEW YORK — ON Semiconductor shares rose Friday after the chipmaker replaced an all-stock agreement to buy Synaptics with a smaller all-cash bid, a cut in headline price that investors treated as a better deal for the buyer.

The stock traded at $84.94, up $4.85, or 6.06 percent, in morning dealings. Other screens showed the shares as high as about $86, up roughly 8 percent. Synaptics jumped more sharply, about 14 percent, to around $121, just under the new offer price.

Under the amended merger agreement, ON Semiconductor will pay $123 in cash for each Synaptics share, a transaction valued at about $5.7 billion. The June deal had been all stock and had valued Synaptics at about $7 billion. The revision followed an unsolicited competing proposal for Synaptics from a third party. The Synaptics board unanimously backed the amended transaction.

"As was the case when we initially announced the acquisition, Synaptics addresses an important aspect of our strategic direction, and we believe the revised merger agreement represents a more financially attractive transaction for our shareholders," ON Semiconductor Chief Executive Hassane El-Khoury said in a statement. He also said the all-cash structure "delivers higher value to our shareholders through lower total cost consideration."

The company said it expects the deal to be immediately accretive to adjusted earnings per share at closing. Funding is to come from cash on hand and committed debt financing, with no closing condition tied to that financing. Reports put committed financing near $2.45 billion. Completion is targeted for mid-2027, subject to Synaptics shareholder approval and customary regulatory clearances.

The arithmetic explains the split reaction. Synaptics holders get a fixed cash price instead of ON shares whose value had fallen. ON Semiconductor stock is down about a third from its midsummer highs, which had shrunk the implied value of the original stock offer and raised doubt that the June terms would hold. Paying cash at $5.7 billion instead of issuing stock at a $7 billion valuation removes dilution and lowers the consideration, which is why the buyer's shares rose on a smaller bid.

Synaptics is an Internet-of-things and interface company whose sensing chips sit at the edge of devices rather than in the data-center processors that have led the semiconductor rally. Management has said it expects fiscal 2026 core IoT revenue to grow more than 40 percent, to more than $385 million, on Edge AI and physical-AI design wins. For ON Semiconductor, the point of the deal is to add that sensing and interface layer to a portfolio built on power devices, including silicon carbide, sold into cars, factories and, increasingly, artificial-intelligence power systems.

That strategy was the subject of the company's investor day. El-Khoury has said that as AI, electrification and automation expand, power density "has emerged as one of the key engineering challenges that will define the next decade," and that the ability to supply power, sense the environment and support decisions "will determine the next generation of intelligent devices." The company has projected a total effective market across automotive, industrial, AI data centers and next-generation uses of $213 billion by 2030. It has also said the AI data-center piece of its business is set to more than double in 2026 and double again in 2027.

Friday's move sits on top of an already strong week. ON Semiconductor closed Thursday at $80.08, up 4.18 percent, before the cash-deal details fully reset the tape. The Friday gain is the market pricing the revised merger, not a second earnings surprise.

Risks remain the ordinary ones in a cash acquisition announced after a competing approach. A higher bid from the unnamed third party could reopen the price. Regulators still have to clear a combination of power semiconductors and edge-sensing chips. Debt taken on to fund $123 a share will sit on a balance sheet that investors had not been asked to lever for this deal in June. And "immediately accretive" is an adjusted figure that excludes the costs of getting there.

For Synaptics holders, the trade is simpler. A stock deal whose value drifted with ON's share price has become a cash bid within a few dollars of where the stock now trades. The board's unanimous support and the premium to the undisturbed price are why SYNA outperformed the buyer on the day.

For ON Semiconductor holders, the gain is a vote that $5.7 billion in cash is preferable to $7 billion in stock for a business meant to extend the company from power into sensing. El-Khoury's case is that the strategic fit has not changed and the terms have improved. The share price on Friday said the market agreed, at least for a morning.