ON Semiconductor (ON) disclosed its attempt to acquire semiconductor manufacturer Allegro MicroSystems (ALGM) in a potential all-cash deal worth roughly $6.9 billion, sending the latter's shares higher early Thursday.

ON Semiconductor proposed to purchase Allegro for $35.10 per share in cash. The offer reflects a 57% premium relative to Allegro's closing share price on Feb. 28, the last trading day before media speculation surfaced about a possible transaction, ON Semiconductor said in a late Wednesday statement.

In a separate statement Thursday, Allegro confirmed it received ON Semiconductor's unsolicited acquisition proposal last month and its board of directors deemed it as "inadequate."

Shares of ON Semiconductor fell 3.8% in premarket activity while Allegro climbed 4.5%.

"We believe the combination of onsemi and Allegro would bring two highly complementary businesses together, benefitting our respective customers and delivering immediate value to Allegro shareholders," ON Semiconductor Chief Executive Hassane El-Khoury said in a statement. "Allegro's unique product portfolio and onsemi's differentiated intelligent power and sensing technologies would create a diversified leader in automotive, industrial and (artificial intelligence) data center applications."

ON Semiconductor said it first expressed its interest to Allegro about buying the company for $34.50 a share in September, with a follow-up approach in December. The company raised its offer to $35.10 in a letter on Feb. 12 and said it made various efforts to engage "meaningfully" with Allegro for a potential deal.

ON Semiconductor expects to finance a potential transaction through a combination of committed financing, cash on hand and funds available under its existing revolving credit facility.

"While we would have preferred to reach an agreement with Allegro privately, the decision to make our proposal public reflects our conviction in the merits of a combined company," according to El-Khoury. "We urge the Allegro board and management team to engage in good faith discussions with onsemi's management team regarding the proposed transaction."

Allegro last week appointed Mike Doogue as its new CEO to succeed Vineet Nargolwala, who stepped down from the role. Doogue previously served as the company's chief technology officer.

Near the end of January, Allegro reported fiscal third-quarter adjusted earnings of $0.07 a share, down from $0.32 the year before. Sales fell to $177.9 million from almost $255 million in the prior-year quarter. At the time, the company said it expected per-share earnings to be in a range of $0.03 to $0.07 on sales of $180 million to $190 million for its fiscal fourth quarter ending March 28.

"The Allegro board of directors reviewed the proposal, in consultation with its independent financial and legal advisors, and determined that the proposal was inadequate," the company said in its Thursday statement.