Onsemi Cuts Synaptics Deal Price by $1.3 Billion in Revised Merger

Semiconductor manufacturer onsemi has secured more favorable terms in its acquisition of Synaptics Incorporated, announcing on October 1 a revised merger agreement that reduces the total value from approximately seven billion dollars to 5.7 billion dollars. The all-cash offer of 123 dollars per share follows an unsolicited competing proposal that prompted both companies to renegotiate the original June 25 deal.

Under the amended terms, onsemi will pay significantly less while gaining the same strategic assets that made Synaptics an attractive target in June. The transaction is now expected to be immediately accretive to onsemi's non-GAAP earnings per share upon closing, a major improvement from the original agreement structure.

Hassane El-Khoury, President and CEO of onsemi, emphasized the improved economics in a statement announcing the revision. "The all-cash transaction delivers higher value to our shareholders through lower total cost consideration, and we now expect the transaction to be immediately accretive to non-GAAP EPS upon closing," El-Khoury said. "In addition, we have identified incremental opportunities to create shareholder value beyond the previously announced 200 million dollars of annual run-rate synergies."

The company expects additional benefits from revenue synergies and insourcing a portion of Synaptics' production to materialize after the initial 18 months post-close. These incremental gains are projected to strengthen the long-term earnings and cash flow profile of the combined entity beyond the original deal thesis.

Synaptics brings human-machine interface and sensing products businesses that generate strong predictable cash flows, providing onsemi with what El-Khoury described as a "durable funding engine" to accelerate connected compute capabilities. The acquisition complements growth in onsemi's AI data center business while maintaining Synaptics' attractive gross margin profile.

The Synaptics Board of Directors unanimously determined after careful review with financial and legal advisors that the amended transaction remains in the best interests of shareholders. "Our Board has been singularly focused on delivering the best outcome for our shareholders, and today's amended agreement reflects that commitment," said Rahul Patel, Synaptics' President and CEO. "By transitioning to an all-cash structure, we are providing value certainty at a meaningful premium as compared to current value."

Onsemi has secured fully committed debt financing from Morgan Stanley to fund the transaction through a combination of cash on hand and new borrowing. Importantly, the amended merger agreement removes any closing condition related to onsemi's financing, eliminating one potential source of deal uncertainty.

The transaction received approval from the United States Federal Trade Commission, with regulators in other jurisdictions currently reviewing the proposed combination. Subject to approval by Synaptics shareholders and receipt of remaining regulatory clearances, the companies expect to close the merger by mid-2027.

The revised terms reflect market dynamics since June, when the original agreement was announced during a different phase of the semiconductor cycle. The competing proposal that emerged prompted both boards to revisit valuation, ultimately resulting in a structure that onsemi characterizes as more financially attractive while still achieving the strategic objectives that made Synaptics a compelling target.