Semiconductor giant ON Semiconductor has revised its acquisition agreement of Synaptics Incorporated, lowering the purchase price to $5.7 billion in an all-cash deal valued at $123 per share. The companies announced the amended merger terms on Thursday, replacing the original June 2026 agreement that valued Synaptics at approximately $7 billion in a stock-and-cash transaction.

The revised structure marks a significant shift in deal economics following an unsolicited competing proposal from a third party. Onsemi opted to counter with an all-cash offer at $123 per share, down from the original blended consideration but eliminating equity dilution for Onsemi shareholders. The new valuation represents a premium to Synaptics' closing price of $106.15 on the trading day before the announcement, sending Synaptics shares up nearly 14 percent in after-hours trading.

Onsemi CEO Hassane El-Khoury framed the revision as creating better economics for his company's owners. "The amended agreement delivers immediate non-GAAP earnings per share accretion upon closing and provides room for incremental value creation beyond the previously announced $200 million in annual run-rate cost synergies," El-Khoury said in a statement. The company plans to pursue additional revenue synergies and partial insourcing of Synaptics production beginning 18 months post-close.

Synaptics' board of directors unanimously approved the amended merger agreement after reviewing the competing proposal. The all-cash consideration removes equity market risk for Synaptics shareholders, who will no longer be exposed to potential volatility in Onsemi's stock price through the expected mid-2027 closing date. The transaction remains subject to Synaptics shareholder approval, regulatory clearances in multiple jurisdictions, and other customary closing conditions.

The Federal Trade Commission has already granted antitrust approval for the merger, removing one major U.S. regulatory hurdle. However, reviews by competition authorities in other jurisdictions are still ongoing. Onsemi will finance the cash consideration through Morgan Stanley committed debt financing, which will increase the company's leverage ratios but preserve balance sheet flexibility for post-merger integration.

The strategic rationale for the acquisition remains unchanged. Onsemi is acquiring Synaptics to gain access to human-machine interface technologies, sensing capabilities, Edge artificial intelligence compute platforms, and wireless connectivity solutions. The combination will pair Synaptics' product portfolio with Onsemi's power management and sensing franchises, creating an integrated supplier for automotive, industrial, and AI data center customers.

Synaptics' headquarters in San Jose houses engineering talent focused on Edge AI acceleration and low-power compute architectures. The company's design teams have developed neural processing units optimized for on-device inference workloads in smartphones, laptops, and internet-of-things devices. Onsemi's production capacity and scale could accelerate Synaptics' roadmap while reducing reliance on third-party foundries for advanced nodes.

The amended deal structure reflects the current semiconductor M&A environment, where buyers have become more cautious about valuation multiples and dilution in the wake of higher interest rates and tightening financial conditions. The shift from stock consideration to all-cash mirrors a broader trend in large technology acquisitions where acquirers are willing to take on debt rather than issue equity at what they view as depressed share prices. The transaction is expected to close by mid-2027, contingent on remaining regulatory approvals and shareholder consent.