Recasts with Allegro MicroSystems rejecting Onsemi's offer

By Pretish M J and Mrinmay Dey

March 6 (Reuters) - Semiconductor solutions provider Allegro MicroSystems ALGM.O on Thursday rebuffed a $6.9 billion takeover approach from Onsemi ON.O, saying the offer was "inadequate" as it refused yet another approach from the larger rival.

U.S. chipmaker Onsemi said on Wednesday it offered $35.10 for each Allegro share in a deal that would help it ride out a prolonged slump in demand for automotive chips, just a few months after the smaller competitor turned down an offer that priced its shares at $34.50 apiece.

New Hampshire-based Allegro confirmed that its board received the proposal in February and decided to reject it after a review.

Allegro said it would not make further comment on this matter.

Onsemi did not respond to a Reuters request for comment on the rejection.

Allegro provides power management systems used in EVs and traditional vehicles, as well as chips essential for systems that assist vehicles brake and steer.

Automotive chipmakers have faced weak demand as automakers struggled to clear excess chip inventory built up during the COVID-19 pandemic while buyers pulled back on big purchases due to an uncertain macroeconomic backdrop.

Onsemi last month forecasted its first-quarter revenue below Wall Street expectations.

Meanwhile, Allegro, which appointed company veteran Mike Doogue as CEO in February, is expected to buck market weakness and return to revenue growth after almost five quarters of declines, according to data compiled by LSEG.

Onsemi, which recently rolled out a cost-cutting plan, had intended to fund the takeover using committed financing, cash, and a revolving credit facility.

Its latest offer was at a premium of about 31% to Allegro's closing on Wednesday.

Allegro's shares rose 22% on Monday after a Bloomberg News report suggested the company was drawing takeover interest from Onsemi.

The smaller company has a market capitalization of about $4.93 billion, according to LSEG data.

(Reporting by Pretish M J, Mrinmay Dey and Arsheeya Bajwa in Bengaluru; Additional reporting by Nilutpal Timsina; Editing by Mrigank Dhaniwala)

((PretishMJ@thomsonreuters.com; +91 8056974974;))