On March 5, 2025, onsemi (NASDAQ: ON), a leading supplier of power semiconductors and image sensors, announced a $6.9 billion all-cash offer to acquire Allegro MicroSystems, Inc. (NASDAQ: ALGM) at $35.10 per share. This proposal represented a 57% premium over Allegro's closing share price on February 28, 2025, the last trading day before media reports surfaced about onsemi's interest in the acquisition. However, on March 6, Allegro rejected the offer, deeming it “inadequate.”

Over the past six months, onsemi had made multiple attempts to engage Allegro in discussions regarding a potential transaction. The initial proposal of $34.50 per share was submitted on September 2, 2024, followed by an improved offer of $35.10 per share on February 12, 2025. Despite these efforts, Allegro's Board of Directors unanimously rejected the latest offer, stating that it undervalued the company.

Hassane El-Khoury, President and CEO of onsemi, emphasized the strategic benefits of the merger:“We believe the combination of onsemi and Allegro would bring two highly complementary businesses together, benefiting our respective customers and delivering immediate value to Allegro shareholders. Allegro's leadership in magnetic sensing and power ICs for automotive and industrial markets, combined with onsemi's expertise in intelligent power and sensing technologies, would create a diversified leader in automotive, industrial, and AI data center applications.”

El-Khoury further stated, “While we would have preferred to reach an agreement privately, we are confident that this merger is in the best interests of both companies' shareholders. We urge Allegro's Board and management team to engage in good-faith discussions to maximize value for Allegro shareholders.”

Allegro, a global leader in power and sensing solutions, has over 30 years of experience in advanced semiconductor technologies, particularly in Hall-effect sensors and magnetic switches. These technologies are widely used in automotive engines, safety systems, ADAS, electric vehicles (EVs), and hybrid electric vehicles (HEVs). Allegro's strong partnerships with major foundries, including PSL, UMC, and TSMC, ensure high-quality and stable product supply, serving over 10,000 customers worldwide, including more than 50 automotive OEMs.

Despite the strategic fit, Allegro's Board found onsemi's offer insufficient. Allegro's largest shareholder, Sanken Electric of Japan, which holds approximately 32% of the company, has not publicly commented on the proposal. In its 2024 annual report, Allegro reported revenue exceeding $105 million to $115 million annually.

The rejection of the proposal highlights the challenges of high-stakes mergers in the semiconductor industry. While onsemi remains committed to its growth strategy, Allegro's decision underscores its confidence in its standalone value and future prospects.