onsemi Announces \$1.3 Billion Convertible Senior Notes Offering – Key Details for Investors

Overview of the Offering

ON Semiconductor Corporation (Nasdaq: ON), known as onsemi, has announced its intention to offer \$1.3 billion aggregate principal amount of Convertible Senior Notes due 2031 in a private offering. The notes will be offered exclusively to qualified institutional buyers under Rule 144A of the Securities Act of 1933. Additionally, the initial purchasers are granted an option to acquire up to an extra \$200 million in principal amount of notes within 13 days from the issuance date.

Use of Proceeds

• Convertible Note Hedge Transactions: A portion of the net proceeds will be used to pay for convertible note hedge transactions, which are intended to reduce dilution and offset potential cash payments above the principal upon conversion of the notes. These costs will be partially offset by proceeds from related warrant transactions.
• Share Repurchase: Up to \$400 million of the proceeds will be used to repurchase onsemi’s common stock (par value \$0.01 per share) in privately negotiated transactions. This repurchase will occur concurrently with the pricing of the offering, potentially affecting the market price of onsemi shares and leading to a higher effective conversion price for the notes.
• General Corporate Purposes: The remainder of the proceeds may be used for general corporate purposes, including repayment of existing indebtedness.
• If the option to purchase additional notes is exercised, onsemi intends to enter into more hedge and warrant transactions, using a portion of those proceeds as described above.

Key Terms of the Notes

• Senior Unsecured Obligations: The notes will be senior unsecured liabilities of onsemi and guaranteed by certain subsidiaries.
• Interest: Interest will be paid semiannually in arrears.
• Maturity: The notes will mature on May 1, 2031, unless repurchased, redeemed, or converted earlier.
• Conversion: onsemi will pay cash up to the principal amount of converted notes, and settle any excess conversion obligation in cash, shares, or a combination thereof, at its discretion.
• Conversion Rate: The initial conversion rate and other terms will be negotiated with the initial purchasers.

Potential Impact on Shareholders and Market Price

• The concurrent repurchase of common stock could affect the share price, potentially resulting in a higher effective conversion price for the notes.
• Convertible note hedge transactions are expected to reduce potential dilution to common stock and/or offset excess cash payments upon conversion.
• Warrant transactions may be dilutive if the market price of common stock exceeds the warrant’s strike price on expiration.
• Hedge counterparties may purchase shares or enter derivatives related to onsemi stock around the pricing date, which could increase or reduce any decline in the share price or the notes. These activities may continue in secondary markets and during observation periods related to note conversions, affecting the value received by holders upon conversion.
• The offering, repurchase, and related hedge and warrant transactions are likely to be price sensitive and may have significant effects on both the share price and the value of the notes.

Regulatory and Legal Notices

• The notes, guarantees, and any shares issuable upon conversion have not been registered under the Securities Act or state securities laws, and cannot be offered or sold in the United States without registration or an exemption.
• This announcement does not constitute an offer to sell or a solicitation to buy these securities.

About onsemi

onsemi delivers intelligent power and sensing technologies targeted at electrification, energy efficiency, safety, and automation in automotive, industrial, and AI data center markets. With a differentiated product portfolio, onsemi helps customers achieve higher efficiency, improved performance, and lower system costs, supporting a safer, cleaner, and more energy-efficient world. The company is part of the S&P 500 index.

Forward-Looking Statements and Risks

This announcement contains forward-looking statements about the proposed terms of the notes, offering size, effects of hedge and warrant transactions, dilution, market price impacts, and the use of proceeds. These statements are based on current expectations and involve risks and uncertainties that may cause actual results to differ materially. Investors are urged to review onsemi’s 2025 Annual Report on Form 10-K and other SEC filings for a comprehensive discussion of risk factors. Investing in onsemi securities involves a high degree of risk and uncertainty, and past performance is not indicative of future results.

Contact Information

• Krystal Heaton
  Director, Head of Public Relations
  onsemi
  (480) 242-6943
  [email protected]
• Parag Agarwal
  Vice President – Investor Relations & Corporate Development
  onsemi
  (602) 244-3437
  [email protected]

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell securities. All forward-looking statements are subject to risks and uncertainties, and investors should review official filings and consult financial advisors before making investment decisions. The information is accurate as of the date of publication and may be subject to change.

View ON SEMICONDUCTOR CORP Historical chart here