onsemi Synaptics Deal Cut to $5.7B Cash as Rival Emerges

onsemi (ON) cut its Synaptics (SYNA) offer to $123 a share in cash, about $5.7 billion, after a rival bid emerged, and shares of both companies rose.

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What Changed in the Revised onsemi-Synaptics Agreement?

The revised agreement swaps a floating stock exchange for a fixed cash price. The June deal set an exchange ratio of 1.350 onsemi shares for each Synaptics share. That structure implied roughly a 19% premium to the companies' ten-day volume-weighted average prices. Its value moved with onsemi's share price.

Under the amended terms, Synaptics holders receive $123 in cash regardless of where onsemi trades. onsemi will fund the purchase from cash on hand and fully committed debt financing from Morgan Stanley (MS). The deal carries no financing condition. onsemi reported $3.9 billion in cash and short-term investments and $5.4 billion in total liquidity at the end of the second quarter. Quarterly free cash flow was $425 million.

The Synaptics board unanimously backed the amended deal after reviewing the rival proposal. The transaction still requires Synaptics shareholder approval and remaining regulatory clearances. The Federal Trade Commission has already cleared it.

Why Did Both Stocks Rise?

Both stocks rose because each side gained something the stock deal did not offer. Synaptics shareholders get a fixed cash price. onsemi shareholders get a lower purchase cost without issuing new shares.

Synaptics shares rose about 14% to $121.32 in early trading on October 2. That sits about 1.4% below the $123 offer, a narrow spread that reflects the market's confidence that the deal will close. onsemi gained about 8% to $86.64. After-hours trading on October 1 had shown the same pattern, with onsemi up more than 5% and Synaptics up more than 12%.

An acquirer and its target rising together is unusual. It signals that the market read the revised terms as favorable to both sides. onsemi's chief executive said the all-cash structure delivers higher value to its shareholders through a lower total cost. The company also said the deal remains immediately accretive to non-GAAP earnings per share. Synaptics' chief executive pointed to value certainty at a meaningful premium.

Strategic Context

The strategic case is unchanged. onsemi has built its business on power, sensing and control chips. Synaptics adds edge AI compute, human-machine interface and wireless connectivity products. onsemi has said the combination would expand its addressable market by $30 billion, to $243 billion by 2030, and support its push toward intelligent systems.

The companies maintained the $200 million in annual run-rate cost synergies announced in June. onsemi also expects additional revenue synergies and benefits from bringing production in-house, beginning about 18 months after closing.

What Happens Next for the Deal?

The deal now moves to a Synaptics shareholder vote and the remaining regulatory reviews. The unnamed third-party bidder has not been identified, and no termination fee has been disclosed in the public summaries of the amendment. The companies have kept the mid-2027 target. They first gave that timeline when the deal was announced and repeated it on the August 3 earnings call.

Two variables will shape the remaining path. One is whether the rival bidder returns with a higher proposal. The other is the cost of the committed debt, which will determine how much of the stated accretion survives. Synaptics trading below $123 indicates the market sees a low chance of a higher competing offer.

Outlook

onsemi traded roughly $1.3 billion of headline value for certainty and a cash structure, and the market rewarded both companies. The next milestones are the Synaptics shareholder vote, the remaining regulatory approvals and the financing terms. The spread between Synaptics' share price and the $123 offer will track how likely investors think the deal is to close.