ON Semiconductor (NASDAQ:ON) shares rose 6.5% in pre-market trading after the company amended the terms of its proposed acquisition of Synaptics (NASDAQ:SYNA), replacing the original all-stock structure with an all-cash transaction.
Under the revised agreement announced on October 1, ON Semiconductor will acquire Synaptics for $123 per share in cash, valuing the transaction at approximately $5.7 billion. The companies had previously agreed to an all-stock transaction valued at approximately $7 billion.
The amendment followed an unsolicited competing proposal for Synaptics from an undisclosed third party. According to the supplied information, the proposal prompted ON Semiconductor and Synaptics to renegotiate the structure and consideration of their existing agreement.
Revised Deal Expected to Be Immediately Accretive
ON Semiconductor said it expects the amended transaction to be immediately accretive to its non-GAAP earnings per share following completion.
The company has also identified potential additional benefits beyond the previously announced target of $200 million in annual run-rate synergies. These include potential revenue synergies and plans to bring a portion of Synaptics’ production in-house.
These benefits remain prospective and will depend on completion and integration of the transaction.
ON Semiconductor plans to finance the acquisition using a combination of cash on hand and committed debt financing from Morgan Stanley. The amended agreement does not include a financing condition to closing.
Baird Maintains Hold Rating
Baird analyst Tristan Gerra maintained a Hold rating on ON Semiconductor following the announcement, with a price target of $108.
ON Semiconductor shares had closed the previous session at $80.08 before advancing in pre-market trading.
The wider U.S. equity market also moved higher, with technology and semiconductor shares among the gainers, according to the supplied information. Micron Technology (NASDAQ:MU) had reported quarterly results in the previous session, while Treasury yields retreated from earlier highs.
The revised Synaptics transaction remains subject to the applicable closing conditions.