U.S. chipmaker Onsemi scrapped its $6.9 billion offer for smaller rival Allegro MicroSystems on Monday, ending a months-long pursuit that sought to capitalize on a market downturn to boost its footprint in the automotive industry.
Allegro had said in March that a sweetened $35.10 per share offer from Onsemi was “inadequate”, just a few months after the smaller chip firm turned down a $34.50 a share proposal.
“We have decided to withdraw our acquisition proposal given the reluctance of Allegro’s Board of Directors to fully engage and explore our proposal,” Onsemi CEO Hassane El-Khoury said.
Allegro did not immediately respond to a request for comment.
Its shares fell 12.5 per cent in extended trading on Monday to $19.25, while Onsemi was trading 1 per cent higher.
Both the stocks took a beating last year as automakers, hit by slowing sales, pulled back on orders for chips after struggling to secure processors during a post-pandemic surge in car demand.
Onsemi had announced a restructuring plan in February that resulted in about 2,400 job cuts as it looked to slash costs.
Buying Allegro would have given the company a bigger presence in the market for power management systems used in EVs and traditional vehicles, as well as chips essential for systems that assist brake and steer functions in vehicles.
