Onsemi shelves $6.9 billion offer to buy Allegro MicroSystems

(Reuters) -U.S. chipmaker Onsemi scrapped its $6.9 billion offer for smaller rival Allegro MicroSystems ( ALGM ) on Monday, ending a months-long pursuit that sought to capitalize on a market downturn to boost its footprint in the automotive industry.

Allegro had said in March that a sweetened $35.10 per share offer from Onsemi was "inadequate", just a few months after the smaller chip firm turned down a $34.50 a share proposal.

"We have decided to withdraw our acquisition proposal given the reluctance of Allegro's Board of Directors to fully engage and explore our proposal," Onsemi CEO Hassane El-Khoury said.

Allegro did not immediately respond to a request for comment.

Its shares fell 12.5% in extended trading on Monday to $19.25, while Onsemi was trading 1% higher.

Both the stocks took a beating last year as automakers, hit by slowing sales, pulled back on orders for chips after struggling to secure processors during a post-pandemic surge in car demand.

Onsemi had announced a restructuring plan in February that resulted in about 2,400 job cuts as it looked to slash costs.

Buying Allegro would have given the company a bigger presence in the market for power management systems used in EVs and traditional vehicles, as well as chips essential for systems that assist brake and steer functions in vehicles.

(Reporting by Utkarsh Shetti in Bengaluru; Editing by Devika Syamnath)