Investing.com -- Shares of onsemi (NASDAQ: ON ) rose by 3.9% today after the company announced it has terminated its efforts to acquire Allegro (WA: ALEP ) MicroSystems (NASDAQ: ALGM ), withdrawing its all-cash proposal to purchase Allegro for $35.10 per share. Meanwhile, Allegro’s stock tumbled by 10.5% as the market reacted to the news.
The decision to withdraw the acquisition proposal came after onsemi concluded there was no actionable path forward. Despite believing in the potential benefits of merging the two complementary businesses, onsemi faced reluctance from Allegro’s Board of Directors to fully engage with the proposal. As a result, onsemi will now redirect its focus towards enhancing shareholder value through its existing share repurchase program.
onsemi’s President and CEO, Hassane El-Khoury, commented on the withdrawal, stating, "onsemi is committed to taking a disciplined approach to capital allocation and maximizing long-term stockholder value." El-Khoury further emphasized the company’s position and future plans, "onsemi is well-positioned, both strategically and financially, and we remain sharply focused on executing on our core growth initiatives while pursuing our value-enhancing capital allocation approach."
The news of the withdrawal was released on April 14, 2025, and marks a pivot in onsemi’s strategy. The company now aims to capitalize on its market-leading technology, strong innovation pipeline, and strategic roadmap, particularly in the automotive, industrial, and AI data centers sectors.
Investors responded positively to onsemi’s disciplined capital allocation strategy and the potential for enhanced shareholder returns through the share repurchase program. Conversely, Allegro’s shares faced a downturn, reflecting investor concerns over the lost acquisition opportunity, which could have provided immediate value to Allegro shareholders as per onsemi’s initial assessment.
The market movements today reflect the immediate investor sentiment surrounding the latest strategic decisions by both companies. Onsemi’s decision to focus on internal growth and shareholder value without the Allegro acquisition seems to have been met with market approval, while Allegro’s investors are now assessing the company’s prospects as an independent entity.
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