Onto Innovation Announces Proposed Private Offering of $1.1 Billion of Convertible Senior Notes Due 2031

Key Terms

convertible senior notes financial

Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.

rule 144a regulatory

Rule 144A is a regulation that makes it easier for companies to sell private bonds to large investors without going through all the usual rules that apply to public sales. It matters because it helps companies raise money more quickly and privately, often attracting big investors looking for special deals.

capped call transactions financial

Capped call transactions are agreements where investors buy options that give them the chance to benefit if a stock's price goes up, but with a limit on how much they can gain. This helps protect them from paying too much if the stock's price rises a lot, similar to having a maximum limit on a reward. They matter because they help investors manage risk while still allowing some upside potential.

hedges financial

Hedges are actions investors take to reduce the chance of losing money from an unwanted event, similar to buying insurance or fastening a seatbelt for a car trip. They work by taking an offsetting position or using a contract that gains when the original investment loses, which lowers potential volatility and downside risk but can also limit upside gains or add cost. Investors use hedges to protect portfolios and manage predictable exposures to price, interest rate, or currency swings.

derivative transactions financial

Derivative transactions are contracts whose value depends on the price or performance of something else—like stocks, bonds, currencies, interest rates or commodities. Think of them as insurance or bets about a future price: investors use them to protect against losses, lock in prices, or try to amplify returns, but they can also magnify losses, create cash demands and expose a firm to the risk that the other party won’t meet its obligation, so they can materially affect a company’s financial stability and volatility.

fundamental change regulatory

A fundamental change is a major shift in how a company or economy operates, like a new technology or a big change in leadership. It matters because such changes can affect the value or stability of investments, making them more or less attractive. Think of it like a major upgrade or shift in the rules of a game that can change the outcome.

qualified institutional buyers financial

Qualified institutional buyers are large organizations, like big investment firms or banks, that are allowed to buy certain types of investment opportunities not available to everyday investors. Their size and experience matter because it ensures they understand and can handle complex financial deals, making markets more efficient and secure.

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WILMINGTON, Mass.--(BUSINESS WIRE)-- Onto Innovation Inc. (NYSE: ONTO) (“Onto Innovation” or the “Company”) today announced that it intends to offer, subject to market and other conditions, $1,100,000,000 aggregate principal amount of Convertible Senior Notes due 2031 (the “Notes”), to be sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Onto Innovation also expects to grant to the initial purchasers of the Notes an option to purchase up to an additional $165,000,000 aggregate principal amount of the Notes, for settlement within a 13-day period beginning on, and including, the first date on which the Notes are issued.

Onto Innovation intends to use (i) a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions described below, (ii) up to approximately $300,000,000 of the net proceeds to repurchase shares of its common stock concurrently with the pricing of the offering in privately negotiated transactions effected with or through one of the initial purchasers or one or more of its affiliates and (iii) the remaining net proceeds for general corporate purposes, which may include financing the previously announced acquisition of 27% of the issued and outstanding shares of the common stock of Rigaku Holdings Corporation.

The Notes will be Onto Innovation’s senior unsecured obligations and will mature on June 1, 2031, unless earlier converted, redeemed or repurchased.

Onto Innovation will satisfy its conversion obligations by paying cash up to the aggregate principal amount of Notes to be converted and paying or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted. The interest rate, the initial conversion rate and the other terms of the Notes will be determined upon pricing of the offering.

Capped Call

In connection with the pricing of the Notes, Onto Innovation expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions will cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of Onto Innovation’s common stock initially underlying the Notes. If the initial purchasers exercise their option to purchase additional Notes, then Onto Innovation expects to enter into additional capped call transactions with the option counterparties. The capped call transactions are expected generally to reduce the potential dilution to Onto Innovation’s common stock upon any conversion of the Notes and/or offset any potential cash payments Onto Innovation is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions and the premium payable will be determined at the time of pricing of the offering.

Onto Innovation has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to purchase shares of Onto Innovation’s common stock and/or enter into various derivative transactions with respect to Onto Innovation’s common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of Onto Innovation’s common stock or the Notes at that time. In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Onto Innovation’s common stock and/or purchasing or selling Onto Innovation’s common stock or other securities issued by Onto Innovation in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and (x) are likely to do so during any averaging period related to a conversion of the Notes, following any redemption of the Notes by Onto Innovation or following any repurchase of the Notes by Onto Innovation in connection with any fundamental change and (y) are likely to do so following any repurchase of the Notes by Onto Innovation other than in connection with any such redemption or any such fundamental change if Onto Innovation elects to unwind a corresponding portion of the capped call transactions in connection with such repurchase). This activity could also cause or avoid an increase or a decrease in the market price of Onto Innovation’s common stock or the Notes, which could affect a noteholder’s ability to convert the Notes and, to the extent the activity occurs during any averaging period related to a conversion of the Notes, it could affect the number of shares of Onto Innovation’s common stock and value of the consideration that a noteholder will receive upon conversion of the Notes.

In addition, if any such capped call transaction fails to become effective, whether or not the offering of the Notes is completed, the option counterparty party thereto may unwind its hedge positions with respect to Onto Innovation’s common stock, which could adversely affect the value of Onto Innovation’s common stock and, if the Notes have been issued, the value of the Notes.

Share Repurchases

The concurrent repurchases of up to approximately $300,000,000 of shares of Onto Innovation’s common stock described above may result in the common stock trading at prices that are higher than would be the case in the absence of these repurchases, which may result in a higher initial conversion price for the Notes.

Notices

The Notes will be offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Notes and any shares of Onto Innovation’s common stock issuable upon conversion of the Notes have not been registered under the Securities Act, or under the securities laws of any state or other jurisdiction, and the Notes and any such shares may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the applicable securities laws of any state or other jurisdiction.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Notes or any shares of Onto Innovation’s common stock issuable upon conversion of the Notes, nor shall there be any offer, solicitation or sale of any Notes or any such shares of Onto Innovation’s common stock issuable upon conversion of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Onto Innovation Inc.

Onto Innovation is a leader in process control, combining global scale with an expanded portfolio of leading-edge technologies that includes un-patterned wafer quality, 3D metrology spanning chip features from nanometer scale transistors to large die interconnects, macro defect inspection of wafers and packages, metal interconnect composition, factory analytics, and lithography for advanced semiconductor packaging.

Our breadth of offerings across the entire semiconductor value chain helps our customers solve their most difficult yield, device performance, quality, and reliability issues. Onto Innovation strives to optimize customers’ critical path of progress by making them smarter, faster and more efficient.

Headquartered in Wilmington, Massachusetts, Onto Innovation supports customers with a worldwide sales and service organization.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include statements relating to the timing, size and completion of the proposed Notes offering, the intended use of proceeds, including the capped call transactions and the share repurchase, the terms of the Notes being offered and the anticipated terms of, and the effects of entering into, the share repurchase and the capped call transactions and the actions of the option counterparties and their respective affiliates, as well as other matters that are not purely historical data. Onto Innovation wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Onto Innovation’s control. Such factors include, but are not limited to, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; fluctuations in customer capital spending; the Company’s ability to effectively manage its supply chain and adequately source components from suppliers to meet customer demand; the effects of political, economic, legal, and regulatory changes, including tariffs and trade disputes, or conflicts on the Company's global operations; its ability to adequately protect its intellectual property rights and maintain data security; the effects of natural disasters or public health emergencies on the global economy and on the Company’s customers, suppliers, employees, and business; its ability to effectively maneuver global trade issues and changes in trade and export regulations, tariffs and license policies; the Company’s ability to maintain relationships with its customers and manage appropriate levels of inventory to meet customer demands; the Company's ability to realize the anticipated benefits of the proposed Notes offering and the capped call transactions on the timing expected or at all; and the Company’s ability to successfully integrate acquired businesses and technologies. You should be aware that these statements and any other forward-looking statements in this press release reflect only Onto Innovation’s expectations and are not guarantees of performance or any particular outcome. Additional information and considerations regarding the risks faced by Onto Innovation are available in Onto Innovation’s Form 10-K for the fiscal year ended January 3, 2026, as filed with the SEC on February 24, 2026, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 as filed with the SEC on May 5, 2026. As the forward-looking statements are based on Onto Innovation's current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Onto Innovation does not assume any obligation to update the forward-looking information contained in this press release, except as required by law.

Source: Onto Innovation Inc.
ONTO-I

View source version on businesswire.com: https://www.businesswire.com/news/home/20260515168831/en/

Investor Relations Contact:
Sidney Ho
408-376-9163
sidney.ho@ontoinnovation.com

Source: Onto Innovation Inc.