Onto Innovation Inc. (NYSE: ONTO) announced plans to offer $1.1 billion in convertible senior notes due 2031 to qualified institutional buyers under Rule 144A of the Securities Act.

The semiconductor equipment company will grant initial purchasers an option to buy an additional $165 million in notes within 13 days of issuance. The notes will mature on June 1, 2031, and represent senior unsecured obligations of the company.

Onto Innovation plans to use proceeds to fund capped call transactions, repurchase up to $300 million of its common stock in private transactions, and for general corporate purposes. The remaining funds may help finance the previously announced acquisition of 27% of Rigaku Holdings Corporation's outstanding shares.

The company will satisfy conversion obligations by paying cash up to the principal amount and either cash, shares, or a combination thereof for any excess conversion value. Interest rates and conversion terms will be determined at pricing.

Onto Innovation expects to enter capped call transactions with initial purchasers or affiliates to reduce potential dilution from note conversions. These counterparties may purchase shares or enter derivative transactions around the pricing date, which could affect the stock price.

The concurrent share repurchases may result in higher stock prices than would occur without these transactions, potentially leading to a higher initial conversion price for the notes.

The notes and any conversion shares have not been registered under the Securities Act and will only be available to qualified institutional buyers. The offering remains subject to market and other conditions.

Onto Innovation provides process control solutions for semiconductor manufacturing, including metrology, inspection, and lithography technologies for advanced packaging applications.