MaxLinear plans to terminate its acquistion of Silicon Motion
MaxLinear (NASDAQ:MXL) said it has exercised its contractual rights to terminate its $3.8 billion planned purchase of Silicon Motion (NASDAQ:SIMO). Silicon Motion rose 25%, paring an earlier gain of 83% on the termination news. MaxLinear fell 13%, partly erasing an earlier decline of as much as 30%.
MaxLinear said it gave notice that it is relieved of its obligation to close the transaction because certain conditions to the closing haven't been met, Silicon Motion suffered a
material adverse effect," and SIMO is in material breach of representations, warranties, covenants, and agreements in the merger agreement, according to a statement on Wednesday.
The termination announcement comes after Silicon Motion (SIMO) shares soared over 80% on Wednesday on news that China had approved the transaction. MaxLinear shares tumbled 20%. The termination decision from MaxLinear (MXL) come as as Aug. 7 deal termination deadline approached.
MaxLinear (MXL) said it provided its notice to terminate the transaction after it received approval from China's antitrust regulator for the deal, according to an 8-K filing.
Silicon Motion (SIMO) didn't immediately respond to Seeking Alpha email request for comment.
Maxlinear (MXL) and Silicon Motion (SIMO) are scheduled resume trading at 3:45pm.
Over a year ago, in May 2022, MaxLinear agreed to acquire Silicon Motion for about $3.8B, or $114.34 in stock and cash.
MaxLinear (MXL) is scheduled to report Q2 results after the close on Wednesday, while Siicon Motion (SIMO) is scheduled to report Q2 results after the close on Thursday.
More on MaxLinear/Silicon Motion
Source: Seeking Alpha
