Why Quantenna Communications Shares Jumped More Than 17% Today

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What happened

Shares of Quantenna Communications (NASDAQ: QTNA) surged 17.5% higher as of 2 p.m. EDT, thanks to a buyout offer from ON Semiconductor (NASDAQ: ON). ON is paying $24.50 per share for the maker of high-performance Wi-Fi networking solutions, and Quantenna's stock is already trading within 2% of that all-cash offer.

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So what

After shelling out $1.07 billion for Quantenna, ON will bolster its portfolio of networking solutions with an innovative collection of everything from chip-level hardware to Wi-Fi management software. The deal is expected to close in the second half of 2019, pending the usual battery of Quantenna shareholder votes and regulatory approvals.

"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," said ON Semiconductor CEO Keith Jackson in a prepared statement.

Now what

Quantenna's board of directors has unanimously accepted ON's offer, celebrating the deal as a signal-booster for the company's ambitions and business prospects. That view makes plenty of sense, considering that ON generates $5.9 billion of annual revenue compared to Quantenna's $220 million.

"Quantenna will benefit from a world-class organization in our commitment to providing the best end user experience for our customers," said Quantenna chairman and CEO Sam Heidari.

Several analyst firms immediately switched their bullish Quantenna ratings to "hold," expecting the deal to simply close at almost exactly the current share prices. For the same reason, I just closed my thumbs-up CAPScall on the stock.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of Quantenna Communications. The Motley Fool has a disclosure policy.