Synaptics jumps 14% as onsemi switches to $123 cash after a rival bid; the stock trades $2.10 below the offer

Synaptics shares rose 13.9% to $120.90 and onsemi gained 5.55% to $84.53 at 11 a.m. Eastern on Friday, according to Nasdaq, after the two companies amended their merger agreement. onsemi will now pay $123 a share in cash for Synaptics, replacing the all-stock deal the companies signed on June 25. The change followed an unsolicited competing proposal from a third party that neither company named.

Why both sides are calling it a win

onsemi says the revised deal has an aggregate value of about $5.7 billion, compared with about $7 billion for the original. Chief executive Hassane El-Khoury said the cash structure delivers "lower total cost consideration" and that the deal should now add to onsemi's adjusted earnings per share as soon as it closes.

Synaptics, meanwhile, told employees in a company-wide email filed with the SEC that $123 in cash "provides higher value and value certainty." Its stock closed Thursday at $106.15, so the cash price is 15.9% above where the market valued Synaptics under the stock deal.

Both claims can hold because an all-stock price moves with the buyer's shares. The $7 billion figure reflects the original terms, while Thursday's $106.15 reflects what the market was paying for them. On Friday, onsemi formally withdrew the share registration it filed in August, because it no longer plans to issue stock for the deal.

The number behind the number: a spread thinner than a T-bill

At $120.90, Synaptics trades $2.10, or 1.74%, below the $123 cash price. The companies still expect to close by mid-2027. Holding until June 30, 2027, about 271 days, would earn roughly 2.3% at an annual rate.

The Treasury yield curve paid 4.27% on a six-month bill and 4.44% on a one-year bill on Oct. 1. A merger spread usually pays more than Treasuries, because deals can fail. This one pays less. One reading is that some traders are positioned for the unnamed bidder to come back with more. That is a reading of the price, not a forecast, and the deal still needs Synaptics shareholders and non-US regulators to sign off.

Some of the deal risk is already gone. The release says the US Federal Trade Commission has approved the transaction, and the amended agreement has no financing condition.

How onsemi pays for it

Morgan Stanley has committed up to $2.45 billion of senior secured term loans, according to the commitment letter: a five-year $1.0 billion term loan A and a seven-year $1.45 billion term loan B. Set against the $5.7 billion headline value, that leaves roughly $3.25 billion to come from onsemi's cash on hand, which the release names as the other funding source.

For onsemi holders, the trade-off is debt instead of dilution. No new shares means existing holders keep their full stake. In exchange, the company takes on secured borrowing at a time when the 10-year Treasury yield is above 5%, as covered in our bond market story. onsemi also said it sees savings beyond the $200 million a year it had already promised, from extra revenue and from making some of Synaptics' products in its own factories, starting about 18 months after closing.

What traders are watching

• The third party: whether the rival bidder is named or returns with a firm offer.
• The vote: Synaptics shareholders still have to approve the amended deal.
• Volume: Synaptics had traded 5.2 million shares by 11 a.m., about eight times its 654,000 daily average.

More deal coverage in stocks.

Sources: onsemi and Synaptics SEC filings (Form 8-K exhibits and Form RW); Nasdaq quotes at 11:00 a.m. ET; US Treasury yield curve. Spread, annualized return and funding split are our calculations. This is market information, not investment advice.