Onsemi and Synaptics said Thursday they have reworked the terms of their merger, swapping an all-stock structure for an all-cash deal worth roughly $5.7 billion — a markdown of more than $1 billion from the companies' original agreement — after Synaptics received an unsolicited takeover approach from a third party.
Under the revised terms, detailed in an amended merger agreement filed with regulators, onsemi will pay $123 a share in cash for the San Jose, California-based chipmaker, versus the 1.350-exchange-ratio stock swap the two sides struck when they first announced a deal on June 25. That earlier agreement valued Synaptics at close to $7 billion and triggered an 8% drop in onsemi shares alongside a 4.4% jump for Synaptics, as investors weighed dilution against strategic logic.
The new structure removes that stock-price risk entirely. Onsemi, a Scottsdale, Arizona-based maker of power semiconductors and sensors for the automotive, industrial and data-center markets, said the cash deal will be funded through a mix of balance-sheet cash and fully committed debt financing arranged by Morgan Stanley. The amended agreement carries no financing-related closing condition, a detail aimed at reassuring Synaptics shareholders that the deal will not unravel over funding. Both stocks had run up sharply this year ahead of the announcement — onsemi more than doubled in 2026 before the June deal, while Synaptics had gained roughly 70% — leaving little room for error on valuation.
A Rival Bidder in the Shadows
Neither company has named the party behind the competing proposal that forced the renegotiation, and the filings are silent on what that rival offered or how high it bid. Synaptics said its board, working with financial and legal advisers, evaluated the unsolicited approach and concluded the amended onsemi transaction remains in shareholders' best interest. The episode is an unusual twist for a semiconductor deal that had already cleared U.S. antitrust review, with other jurisdictions' approvals still pending.
Executives from both companies framed the amendment as a trade of upside for certainty.
"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."
Hassane El-Khoury, President and CEO, onsemi
"By transitioning to an all-cash structure, we are providing value certainty at a meaningful premium as compared to current value."
Rahul Patel, President and CEO, Synaptics
The original deal was pitched as a bet on "physical AI" — embedding intelligence directly into machines and devices rather than routing everything through the cloud. Synaptics makes human-interface and edge-processing chips used in cars, industrial equipment and consumer electronics; onsemi supplies power semiconductors and sensors for many of the same end markets. Combining the two product lines, the companies argued, would let customers buy a more complete edge-AI chip stack from a single supplier rather than stitching components together themselves.
Wall Street's reception to that logic was tepid from the outset. TD Cowen analysts warned the tie-up could dilute onsemi's automotive and data-center growth narrative and add integration complexity, with synergies and earnings accretion likely to take time to materialize — a concern the switch to an all-cash structure simplifies for Synaptics holders but does not directly resolve for onsemi's own equity story.
What Happens Next
The amended deal still needs a vote from Synaptics shareholders and remaining regulatory clearances outside the U.S., where reviews are ongoing. Onsemi and Synaptics are targeting a close by the middle of 2027, roughly a year after the deal was first unveiled in June. Investors will be watching the shareholder vote for signs of how much support the original stock-swap structure actually retained, and whether the unnamed rival bidder resurfaces before the vote is held.
