ON Semiconductor shares fall 21% after $7B Synaptics deal

Shares of ON Semiconductor plunged approximately 21% on Friday after the chipmaker announced a definitive agreement to acquire Synaptics in an all-stock transaction valued at about $7 billion. The sharp decline erased a significant portion of the stock's 119% year-to-date gains, reflecting investor skepticism over the deal's near-term financial impact and integration risks.

The acquisition, described by ON Semiconductor as its largest ever, is aimed at strengthening the company's position in what it terms "physical AI," or artificial intelligence embedded in devices that interact with the physical world, such as autonomous vehicles, industrial robots, and drones. Under the terms of the agreement, Synaptics shareholders will receive 1.35 shares of ON Semiconductor common stock for each Synaptics share they hold, representing a premium of roughly 19% based on recent trading averages. Synaptics shareholders are expected to own approximately 12% of the combined company.

ON Semiconductor Chief Executive Hassane El-Khoury framed the deal as strategically positioning the company at the intersection of sensing, computing, connectivity, and control. He stated that Synaptics' AI-native...