A week after Allegro MicroSystems rejected a buyout proposal from ON Semiconductor, ALGM stock is trading well below Onsemi's proposed takeout price. The stock action signals investor skepticism over whether Onsemi or another suitor could acquire the fabless semiconductor company.
On March 5, Onsemi publicly proposed to acquire Allegro for $35.10 a share in cash. The buyout price was a 57% premium to ALGM stock price before news of the deal leaked. The proposed acquisition valued Allegro at $6.9 billion.
Onsemi said it has made numerous attempts over the past six months to enter into constructive discussions regarding a potential transaction.
On March 6, Allegro announced that it had received an unsolicited acquisition proposal from Onsemi. Further, it said its board of directors had reviewed the proposal and determined that it was "inadequate."
On the stock market today, ALGM stock fell 8.3% to close at 25.41.
Meanwhile, ON stock dropped 2.7% to close at 44.16.
According to IBD MarketSurge charts, ALGM stock has formed a cup base with a buy point of 33.26.
Both companies are suffering through a cyclical decline in demand for chips for automotive and industrial applications.
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