Mizuho sees 10% cost synergies from On acquiring Allegro

Mizuho analyst Vijay Rakesh keeps Outperform ratings on both Allegro MicroSystems (ALGM) and On Semiconductor (ON) after Bloomberg reported On is considering a takeover of the company. A deal could create 10% cost synergies, with typical semiconductor takeout premiums at 30%-40% premiums over prior 52-weeks in the last five years, the analyst tells investors in a research note. Mizuho sees the potential deal driving synergies and expanding On’s “strong” portfolio by adding Allegro’s leading magnetic sensor portfolio.