The circuit board side of a Synaptics touchpad from a ThinkPad X230 laptop, with a chip marked Synaptics T1320A at the upper right and the Synaptics name printed on the board · Raimond Spekking, via Wikimedia Commons · CC BY-SA 4.0

Article · 2026-10-02 · 8 min read · Semiconductors · Stocks

After a rival bid, onsemi rewrites its Synaptics deal in cash

On Thursday 1 October onsemi and Synaptics replaced their June merger agreement after Synaptics' board found a rival's revised proposal superior: Synaptics' holders are now to be paid in cash, for an aggregate value the companies put at about $5.7 billion against about $7 billion for the all-stock June terms; onsemi has lined up as much as $2.45 billion of Morgan Stanley loans, the termination fees stay at $235 million and $320 million, and the companies still expect to close by mid-2027.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

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What the companies signed

On Thursday 1 October onsemi, formally ON Semiconductor Corporation, and Synaptics signed an amended and restated agreement and plan of merger, which replaces in its entirety the Agreement and Plan of Reorganization they signed on Thursday 25 June; both companies reported it to the Securities and Exchange Commission the same day. Under the June terms Synaptics' holders were to be paid in onsemi shares; under the new ones they are to be paid in cash. The companies' joint release puts the aggregate value at approximately $5.7 billion, against approximately $7 billion for the June agreement, and says the deal is still expected to close by mid-2027. ^{[1, 3, 2, 6]}

The rewrite began with a rival. On Wednesday 2 September Synaptics received an unsolicited, non-binding proposal from a 'strategic party' to acquire all of its shares, its report says. The board, with a special committee of independent directors, reviewed it and, after Synaptics engaged with the bidder, determined in good faith, after consulting its outside lawyers and its financial adviser, that the proposal as the bidder revised it was a 'Superior Proposal', the agreement's term for a better offer. After 'further negotiations between onsemi and Synaptics', the board determined that, in light of the new terms, the rival's proposal 'no longer constituted a Superior Proposal' and approved the amended agreement unanimously, and the parties signed it. The joint release says the board 'unanimously determined that the onsemi transaction, as amended, continues to be in the best interests of Synaptics and its shareholders'. ^{[1, 2]}

Both companies' reports call the bidder Party A, the name onsemi's registration statement of Friday 21 August gave to a strategic bidder whose chief executive first raised buying Synaptics with Synaptics' chief executive, Rahul Patel, on Thursday 12 February, and which proposed in March and again in April to pay in a mix of cash and its own listed shares, before Synaptics agreed terms with onsemi. No filing or report read for this piece names Party A or gives the terms of its September proposal; Quartz describes the bidder as 'an unidentified third party'. ^{[1, 3, 7, 9]}

How a signed deal is reopened

A signed merger agreement binds both sides, but this one, in June as now, leaves Synaptics' board a way out: until the shareholders vote, the board may end the agreement to sign a superior proposal, defined as a written offer for at least half of the company that the board judges likely to be completed and better for holders 'from a financial point of view', after counting the termination fee Synaptics would owe onsemi. First the board must give onsemi four business days' notice naming the bidder, with a copy of the proposal and the draft agreement, and, if onsemi asks, negotiate in good faith over 'a possible amendment of this Agreement' that would stop the rival's offer being superior. Each change in the rival's price or other material terms brings a fresh notice and at least two more business days to negotiate. ^{[4, 7]}

The switch from shares to cash is the heart of the rewrite. In June, Synaptics' holders were to receive a fixed number of onsemi shares for each share they held, about 12 percent of the combined company in all, and a payment in shares is worth, in dollars, whatever those onsemi shares are worth on the day of closing, so the June figure of about $7 billion measured the shares as they stood when the deal was announced and was never a sum of money Synaptics' holders were promised. Synaptics' financial adviser, Qatalyst Partners, discussed that risk with the special committee on Thursday 28 May, by the registration statement: 'the potential risks associated with stock price volatility of Synaptics stock and onsemi stock between signing and closing'. Cash is a fixed sum. The joint release says the new terms provide 'value certainty' for Synaptics' holders, and onsemi's chief executive, Hassane El-Khoury, said the all-cash terms deliver higher value to onsemi's own shareholders 'through lower total cost consideration'. ^{[6, 7, 2]}

The two headline values are also measured differently on the record. In June the companies called their figure a 'total enterprise value', a measure that counts a company's debt as well as its shares; Bloomberg reported at the time that the deal valued Synaptics at about $6.2 billion, and at roughly $7 billion including debt. Synaptics owed $850.0 million of debt in principal at the end of June, by its annual report. The October release sets 'approximately $5.7 billion' against 'approximately $7 billion for the prior agreement' without saying whether the new figure counts that debt. ^{[6, 10, 8, 2]}

What paying cash changes

Cash also removes what only a share deal needed. The new agreement drops closing conditions including an effective registration statement for the new onsemi shares, their listing on Nasdaq, the absence of a continuing material adverse effect at onsemi, meaning a serious and lasting blow to its business, and tax opinions; onsemi said it intends to withdraw the registration statement, and some of its promises about running its own business while the deal is pending were removed. The merger is 'no longer structured as a reorganization under Section 368 of the Internal Revenue Code', the June design under which U.S. holders swapping their shares would generally not recognize a gain or loss for federal income tax, by the registration statement. Holders who do not vote for the deal and properly claim the right may now seek appraisal of their shares under Delaware law, a valuation in place of the cash, which the share terms did not allow. And onsemi no longer has to put a Synaptics director on its board, which Quartz also reported, citing the Wall Street Journal. ^{[3, 7, 9]}

onsemi will pay with cash on hand and borrowed money. Its commitment letter of 1 October from Morgan Stanley Senior Funding provides up to $2.45 billion of senior secured term loans, which are loans repaid on a schedule and backed by a first claim on substantially all the property of onsemi and the subsidiaries that guarantee them: a five-year term loan A of up to $1.0 billion, and a seven-year term loan B of up to $1.45 billion that pays 2.25 percentage points over Term SOFR, a benchmark interest rate. Each loan is drawn once, on the closing day, and only for the cash price and the deal's costs. The financing is not a condition of the merger: onsemi's obligation to close does not depend on getting the loans. ^{[5, 3, 2]}

onsemi says the deal will be 'immediately accretive' to its non-GAAP earnings per share: it expects profit per share, on its own adjusted measure rather than under generally accepted accounting principles, to be higher with Synaptics than without from the closing. In June it put that point within 18 months of closing. Earnings per share is profit divided by the number of shares, and the cash terms hand Synaptics' holders no onsemi shares while adding interest on the new loans. El-Khoury also said onsemi had found gains beyond the $200 million a year of synergies, the benefits of combining, announced in June, from extra revenue and from making part of Synaptics' production in-house, expected after the first 18 months. Synaptics designs its chips and has outside wafer makers and packaging and test houses make them, by its annual report; its net revenue was $1,197.2 million in the year to 27 June, up 11.4 percent on the year before. ^{[2, 6, 5, 8]}

What walking away costs

The termination fees, sums fixed in advance that one side pays the other if the deal ends in particular ways, are the June amounts. Synaptics pays onsemi $235 million if it ends the agreement to sign a superior proposal, or if onsemi ends it because Synaptics' board changed its recommendation or left it out of the proxy statement. It owes the same if a rival's proposal was made public and not withdrawn, the deal then fails at the vote or through a breach by Synaptics, and within 12 months Synaptics agrees to or completes another sale. onsemi pays Synaptics $320 million if the deal ends at its outside date, or under a final court or government order, with only the antitrust or foreign-investment approvals missing, or because onsemi materially broke its promise to work for those approvals. ^{[4, 7, 3]}

The agreement says the parties 'would not enter into this Agreement' without these terms, and a fee once paid is the receiving side's 'sole and exclusive remedy' for damages, short of fraud or an intentional and material breach. The Synaptics fee also sets the bar for a rival: a superior proposal has to be better for Synaptics' holders after counting the $235 million Synaptics would pay onsemi to leave. When the June terms were set, Synaptics' board and special committee judged that fee, about 3.3 percent of the deal's equity value at signing, 'not likely to preclude or unduly discourage' a competing offer, by the registration statement, which puts the regulatory fee at about 4.5 percent. ^{[4, 7]}

What settles it next

Synaptics must file a preliminary proxy statement, the document that asks holders for their votes, within ten days of 1 October, and must hold the vote within 30 days of learning that the SEC staff will not review it or has no further comments; no filing read for this piece sets a date. Approval needs a majority of all Synaptics shares outstanding, not just of the votes cast. In the United States the waiting period, the time a merger must wait while antitrust officials review it, ended early on Wednesday 12 August, when the Federal Trade Commission granted early termination. In August the companies listed merger filings in China, Hungary, Japan, South Korea and Taiwan besides the United States, and foreign-investment filings in France and the United Kingdom; the release of 1 October says regulators in other jurisdictions are reviewing the deal, without naming them. ^{[3, 4, 7, 2]}

The companies expect to close by mid-2027. The agreement's outside date, after which either side may end it, is 11:59 p.m. Pacific time on Friday 25 June 2027; if by then only the regulatory approvals are missing, it extends itself by three months at a time, up to three times. Morgan Stanley's loan commitment lapses five business days after that date, as extended. ^{[2, 4, 5]}

Who it reaches

onsemi (ON) is the buyer: it now pays cash, has lined up as much as $2.45 billion of loans to do it and hands Synaptics' holders no shares. Synaptics (SYNA) is the company being bought; its holders vote on the new terms and may seek appraisal instead. Morgan Stanley (MS) is reached through its affiliate Morgan Stanley Senior Funding, which committed the term loans and is their lead arranger; Morgan Stanley was also onsemi's lead financial adviser on the June agreement. Party A is unnamed in every record read here and is not tagged. ^{[3, 5, 6, 1]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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