Are Quantenna Shareholders Getting Enough in the Buyout?

There seems to be more consolidation within the semiconductor industry, as ON Semiconductor Corp. (NASDAQ: ON) has announced that it will be acquiring Quantenna Communications Inc. (NASDAQ: QTNA).

Under the terms of the agreement, On Semiconductor will acquire Quantenna for $24.50 per share in an all-cash transaction. The acquisition consideration represents equity value of roughly $1.07 billion and enterprise value of about $936 million, after accounting for Quantenna’s net cash of approximately $136 million.

Note that this transaction represents premiums of 39.3% and 47.2% from the 50-day and 200-day moving averages of $17.59 and $16.64, respectively.

Ultimately, through this acquisition, ON Semiconductor is looking to significantly enhance its connectivity portfolio with the addition of Quantenna’s industry-leading Wi-Fi technology and software capabilities.

The completion of the transaction is subject to approval by Quantenna’s stockholders, regulatory approvals and other customary closing conditions.

Following completion, the transaction is expected to be immediately accretive to ON Semiconductor’s earnings per share and free cash flow.

Keith Jackson, president and CEO of ON Semiconductor, commented:

We are very pleased to welcome Quantenna to ON Semiconductor’s team. The acquisition of Quantenna is another step towards strengthening our presence in industrial and automotive markets. The combination of ON’s expertise in highly efficient power management and broad sales and distribution reach, and Quantenna’s industry leading Wi-Fi technologies and software expertise creates a formidable platform for addressing fast growing markets for low-power connectivity in industrial and automotive applications. I am very excited about the opportunity this acquisition creates for customers, shareholders, and employees of the two companies.

Shares of Quantenna closed Wednesday at $20.50, in a 52-week range of $12.48 to $21.65. The stock has a consensus price target of $20.22. Following the announcement, the stock was up about 18% to $24.18 in early trading indications Thursday.

ON Semiconductor closed Wednesday at $20.56 a share. The 52-week trading range is $14.55 to $26.38, and the consensus analyst target is $25.27.