Onsemi (NASDAQ:ON) shares fell about 19% on Thursday after the semiconductor company announced an agreement to acquire Synaptics (NASDAQ: SYNA) in an all-stock transaction valued at approximately $7 billion.
Shares of Synaptics added about 3% to about $130 on the news.
Under the terms of the deal, Synaptics shareholders will receive 1.35 shares of Onsemi (NASDAQ:ON) common stock for each Synaptics share they own, representing an approximately 19% premium to the companies' respective 10-day volume-weighted average closing prices.
Synaptics shareholders are expected to own about 12% of the combined company on a fully diluted basis following the transaction.
Onsemi said the acquisition would expand its focus beyond power and sensing technologies into intelligent systems and edge artificial intelligence applications. The company expects the combination to increase its total addressable market by $30 billion to $243 billion by 2030 and strengthen its position in what it describes as "Physical AI" applications, including autonomous vehicles, robotics and augmented and virtual reality.
Synaptics brings its Astra Edge AI platform, wireless connectivity technologies and human-machine interface products to the combined business. Onsemi expects the transaction to generate about $200 million in annual synergies and become accretive to non-GAAP earnings per share within 18 months of closing.
The companies expect the deal to close in mid-2027, subject to regulatory approvals, Synaptics shareholder approval and other customary closing conditions.
Both companies reiterated their previously issued financial outlooks for their current quarters.