onsemi Synaptics Amended Merger: $123 Cash Is a Raise, Not a Cut, and the Spread Prices a Rival
The $7 billion headline was a fixed 1.35-share ratio worth about $108 per Synaptics share by Thursday; the new $123 in cash is a raise of roughly 14%. Synaptics trades 1.7% under the offer, which is less than cash would earn, so some buyers expect the rival bidder to come back.
A price that falls from $7 billion to $5.7 billion is usually a bidder getting its way. At onsemi it is a bidder paying more. The $7 billion in the June 25 agreement was a fixed 1.35 onsemi shares for each Synaptics share, and onsemi's stock has fallen since. The amended deal pays $123 in cash per share, a raise of about 14% over what the stock offer had become.
onsemi closed Thursday at $80.08, before the news lifted it $4.32. Multiply by 1.35 and the stock deal was worth about $108 per Synaptics share on the eve of the amendment. The joint release still compares $5.7 billion with "approximately $7 billion for the prior agreement", and that older figure is frozen at the day the ratio was set.
The reason for the raise is in the release itself: the boards amended the agreement after "an unsolicited competing proposal received from a third party." The 8-K calls that bidder "Party A," the label onsemi's S-4, filed August 21, gave an unsolicited acquisition proposal, and the filings give no other name. They do show the cost: about $15 more per share for Synaptics holders than the old deal was worth that morning.
The structure matters as much as the price. A fixed exchange ratio hands the acquirer's stock risk to the target's holders, and Synaptics holders had spent three months absorbing onsemi's decline. Cash ends that. Whatever onsemi trades at between now and a mid-2027 close, they get $123. The ratio passed onsemi's fall through to Synaptics holders, and a rival bid forced onsemi to reset the number above where the stock deal had drifted.
The June terms had already priced a modest premium, about 19% over Synaptics' stock at the time, with the same $200 million of annual synergies and the same mid-2027 close. What changed in the autumn was the competition, and the competition changed the form of payment as well as the amount. A target holding an unsolicited rival proposal does not have to accept a bidder's stock at a ratio set three months ago, and Synaptics' board used that position to get cash. For a bidder that wants the asset, paying in cash is the cleaner way to say the price will not be argued over again.
For onsemi the trade is dilution for debt. The 8-K discloses a $2.45 billion senior secured term loan commitment from Morgan Stanley, and the release says the rest comes from cash on hand. Issuing shares for the whole deal would have cost existing holders more of the company at a depressed price, and onsemi's own stock is the currency that fell. Paying cash means the shareholder register stays intact and the cost shows up as interest. The company calls the deal immediately accretive to non-GAAP earnings per share, and says it still expects $200 million of annual run-rate synergies, with more revenue synergies and insourcing after the first 18 months.
The 8-K also lists what onsemi gave up to make a cash deal safe for the seller. There is no financing condition. The deal is no longer a tax reorganisation, and the closing conditions tied to registration statement effectiveness, a Nasdaq listing, an onsemi material adverse effect and tax opinions are gone. So is the requirement to seat a Synaptics director on onsemi's board. onsemi intends to withdraw the S-4, since there are no shares to register. Each removed condition is one fewer way for the deal to fail, which is also what a second bidder would be up against.
Regulators are the main thing left that could slow it. The release says the US Federal Trade Commission has approved, with other regulators still reviewing, and expects closing by mid-2027. That is a long wait, and the Synaptics share price puts a number on it.
Synaptics shares changed hands at $120.94 in Friday morning trading, up 13.9%, or $14.78, after a 16% gain in Thursday's after-hours session. The offer is $123. The gross spread is $2.06, or 1.7%. Held to a mid-2027 close, roughly nine months, that is about 2.3% annualised, against a policy rate near 4%. A buyer at $120.94 who sees the deal through earns less than cash would, and carries the regulatory risk as well.
Someone is buying anyway, and the likeliest reason is Party A. A spread that tight only makes sense if part of the price is a bet on a second offer above $123. The filings do not say Party A has withdrawn. Anyone holding Synaptics at this price is choosing between a sub-cash return and an option on that bidder.
onsemi's own shares rose 5.4% on Friday morning to $84.40, a market value of $32.87 billion. The two stocks deliver a split verdict: Synaptics is priced for a rival that may return, and onsemi for a deal it can close at $123.
The calendar will settle it. Under the 8-K, Synaptics must file a preliminary proxy within 10 days, which is about October 11, and holders get appraisal rights alongside the vote. The special meeting follows within 30 days of the SEC's notice that it will not review the proxy. If the proxy arrives on time with no new bidder described in its background section and the spread stays under 2%, the market will have decided Party A is gone. A spread that widens toward the roughly 3% that cash would earn over nine months would say the same thing from the other side. A proxy that adds a late chapter on the sale process would mean someone is bidding above $123.