ON Semiconductor (ON) investor relations material

Deal rationale and strategic fit

• The combination accelerates evolution into intelligent systems, expanding from AI data centers to physical AI and edge applications, leveraging complementary strengths in power, sensing, control, and AI-native compute.

• The deal expands the total addressable market by $30 billion, targeting $243 billion by 2030, and positions the company to address AI from infrastructure to the edge.

• Synaptics' AI-native compute and connectivity platforms complement the acquirer's power and sensing portfolio, enabling broader reach in automotive, industrial, robotics, AR/VR, and edge AI markets.

• The combined company will offer all key building blocks for machines to sense, decide, act, and adapt, strengthening leadership at the intersection of power, sense, control, and connected compute.

• The acquisition accelerates innovation and market access through a global sales network and established customer relationships, deepening customer engagement.

Financial terms and conditions

• The acquisition is an all-stock transaction, with Synaptics shareholders receiving 1.35 shares per Synaptics share, implying a $7 billion enterprise value and a 19% premium to the 10-day volume-weighted average price.

• Pro forma ownership will be 88% acquirer and 12% Synaptics.

• Pro forma net debt is $1.2 billion, with net leverage well below one, maintaining flexibility for capital returns.

• The combined company is projected to reach $7.8 billion in revenue by 2026, with attractive gross margins and non-GAAP EPS accretion expected within 18 months of closing.

• The transaction was unanimously approved by both Boards of Directors.

Synergies and expected cost savings

• $200 million in annual run-rate synergies are expected within 18 months post-close, with 85-90% from OpEx (mainly SG&A) and the remainder from COGS.

• Revenue synergies are anticipated due to minimal customer overlap and complementary portfolios, enabling faster growth than standalone entities.

• Manufacturing synergies may arise in human-machine interface and sensing, leveraging existing fab capabilities for margin improvement.

• Enhanced scale and profitability, with accretion to non-GAAP EPS within 18 months after closing.

• Gross margins expected to align with long-term financial targets.