It’s been suggested that Onsemi is working with advisers about acquiring Allegro, a provider of sensor integrated circuits, and there is now a possibility that other companies interested in acquiring the company could emerge – even though Allegro hasn't indicated any interest in being open to a potential sale.
An acquisition of Allegro would be most likely used by companies to ‘bulk up’ their automotive capabilities and Onsemi is said to be keen to strengthen its automotive chip business.
The news comes as Onsemi has initiated a restructuring plan to cut costs following a poor set of results in the first quarter, due to softening demand for automotive chips, and has announced job losses of over 2500.
Allegro has a market valuation of $4.1 billion while Onsemi is valued at $19.8 billion. Both have seen their valuations tumble in recent months, Allegro is down over 30 per cent in the past year, while Onsemi’s has fallen 40 per cent.
A tie up would bring together two significant players in power and sensing at a time when automotive chipmakers are facing tough market conditions with increased pressure on sales as the EV market in the US slows.
Neither company has confirmed any of these rumours, but it’ll be interesting to see how this story unfolds.
Update: Allegro MicroSystems has turned down a $6.9 billion takeover approach from Onsemi saying the offer was "inadequate" as it refused an approach from its larger rival. The offer appears to have been made last month.
