Allegro MicroSystems Launches Primary Offering of Common Stock

Rhea-AI Summary

Allegro MicroSystems (Nasdaq: ALGM), a leader in power and sensing solutions, has launched a primary offering of 25,000,000 common stock shares. The company may grant underwriters a 30-day option for an additional 3,750,000 shares. Proceeds will be used to repurchase shares from majority shareholder Sanken Electric Co., at the same price as the offering. Barclays, Morgan Stanley, and UBS Investment Bank are joint lead book-running managers, with PJT Partners as financial advisor. The offering is subject to market conditions and made through an effective shelf registration statement filed with the SEC.

Positive

• Potential to strengthen Allegro's capital structure
• Opportunity to diversify shareholder base by reducing majority shareholder's stake
• Engagement of reputable financial institutions as underwriters and advisors

Negative

• Potential dilution of existing shareholders' ownership
• Uncertainty regarding the offering's completion and final terms
• Use of proceeds primarily for share repurchase rather than business growth or operations

Insights

Financial Analyst

Allegro MicroSystems' decision to launch a primary offering of 25,000,000 shares of common stock, along with an additional 3,750,000 shares option, is a significant move. The primary purpose of this offering is to buy back shares from their majority shareholder, Sanken Electric Co., Ltd. This repurchase could be interpreted as Allegro aiming to reduce Sanken's control, potentially increasing market confidence in the company's independent growth prospects. Since the offering size and terms are subject to market conditions, the ultimate success will rely heavily on investor sentiment and overall market stability.

Additionally, the involvement of top-tier financial institutions like Barclays, Morgan Stanley and UBS Investment Bank as book-running managers signals a strong endorsement of the offering's credibility. PJT Partners acting as a financial advisor further adds to the operation’s legitimacy. Investors should watch the pricing of the offering and initial market reactions to gauge short-term impacts on Allegro's stock price. The successful completion of this offering would provide Allegro with significant capital, enhancing financial flexibility and potentially leading to strategic investments or debt reduction.

Market Research Analyst

The launch of this primary stock offering by Allegro MicroSystems is particularly impactful in the context of the semiconductor industry. The offering reflects confidence in the current market demand for Allegro's power and sensing technology solutions. The repurchase of shares from Sanken Electric is noteworthy as it indicates a shift towards more autonomy for Allegro, which could be seen positively by investors looking for a clearer corporate structure and governance.

From a market perspective, this move may be aimed at capitalizing on current high valuations in the tech sector. The potential dilution of shares could be a concern for existing shareholders, but if the capital raised is utilized efficiently, the long-term benefits could outweigh the dilution impact. Investors should monitor how Allegro plans to deploy the funds raised post-repurchase, as effective utilization could drive growth and enhance shareholder value.

MANCHESTER, N.H., July 23, 2024 (GLOBE NEWSWIRE) -- Allegro MicroSystems, Inc. (“Allegro”) (Nasdaq: ALGM), a global leader in power and sensing solutions for motion control and energy-efficient systems, today announced the launch of a primary offering of 25,000,000 shares of common stock. In addition, Allegro expects to grant the underwriters a 30-day option to purchase up to an additional 3,750,000 shares of its common stock. Proceeds from the offering, together with cash on hand or additional borrowings under Allegro’s term loan facility or revolving credit facility, will be used to repurchase shares from Allegro’s majority shareholder, Sanken Electric Co., Ltd. (“Sanken”) at a price per share equal to the price per share at which the underwriters will purchase shares of our common stock in the equity offering from Allegro. The offering is subject to market conditions, and there can be no assurance as to whether, or when, the offering may be completed or as to the actual size or terms of the offering.

Barclays, Morgan Stanley and UBS Investment Bank are acting as joint lead book-running managers for the offering. PJT Partners is acting as financial advisor to Allegro.

This offering is being made pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”) on July 23, 2024. The shares of common stock will be offered only by means of a prospectus supplement and the accompanying prospectus forming a part of the effective shelf registration statement. Before you invest, you should read the prospectus in that registration statement and the documents incorporated by reference in that registration statement, as well as the prospectus supplement related to this offering.

Copies of the preliminary prospectus supplement related to this offering and the accompanying prospectus may be obtained from Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by telephone (toll-free): (888) 603-5847 or by emailing: barclaysprospectus@broadridge.com; Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, New York, New York 10014, or by emailing: prospectus@morganstanley.com; or UBS Securities LLC, Attention: Prospectus Department, 1285 Avenue of the Americas, New York, NY 10019, by telephone: (888) 827-7275 or by emailing: ol-prospectusrequest@ubs.com. You may also obtain these and the other documents referred to above for free by visiting the SEC’s website at www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Allegro MicroSystems

Allegro MicroSystems, Inc. is a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling emerging technologies in the automotive and industrial markets. Allegro’s diverse product portfolio provides efficient and reliable solutions for the electrification of vehicles, automotive ADAS safety features, automation for Industry 4.0 and power-saving technologies for data centers and clean energy applications.

About Sanken

Sanken’s mission as a company is to provide optimal solutions in the broad and expansive field of electricity and electronics with semiconductors, its core business, power electronics and peripheral fields. Sanken provides products globally for the increasingly electrified automotive industry, as well as for white goods and industrial equipment, which are becoming more energy efficient as demand for electricity increases. Sanken Electric works to constantly innovate its technological capabilities and provides products of assured quality to help solve global environmental and social issues and further develop industry, the economy and culture.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the expected sale of common stock in the offering and the repurchase of shares from Sanken, each as described above. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the factors discussed under the caption “Risk Factors” in the prospectus supplement related to this offering, our Annual Report on Form 10-K for the fiscal year ended March 29, 2024, filed with the SEC on May 23, 2024, and our other filings with the SEC, any of which could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Contact:
Jalene Hoover
VP of Investor Relations & Corporate Communications
+1 (512) 751-6526
jhoover@allegromicro.com

FAQ

How many shares is Allegro MicroSystems (ALGM) offering in its primary stock offering?

Allegro MicroSystems is offering 25,000,000 shares of common stock, with a potential additional 3,750,000 shares through an underwriter option.

What is the purpose of Allegro MicroSystems' (ALGM) stock offering announced on July 23, 2024?

The primary purpose is to use the proceeds to repurchase shares from Allegro's majority shareholder, Sanken Electric Co., , at the same price as the offering.

Who are the underwriters for Allegro MicroSystems' (ALGM) stock offering?

Barclays, Morgan Stanley, and UBS Investment Bank are acting as joint lead book-running managers for the offering.

Will Allegro MicroSystems' (ALGM) stock offering dilute existing shareholders?

Yes, the offering of new shares may potentially dilute the ownership of existing shareholders.