Silicon Motion introduces Insights on MaxLinear’s Unexpected Termination of Merger Deal

In a surprising turn of events, Silicon Motion Technology Corporation has revealed further details regarding MaxLinear’s decision to terminate their agreement to acquire the company. The termination notice, issued on July 26, 2023, lacked a factual basis for MaxLinear’s claim that it was not obligated to proceed with the acquisition due to a material adverse effect on Silicon Motion’s business.

What makes this situation even more perplexing is the fact that MaxLinear never raised any concerns about a breach of the merger agreement or the occurrence of a material adverse effect prior to sending the termination notice. In fact, just weeks before the notice was sent, MaxLinear had been actively requesting information from Silicon Motion to facilitate the integration of the two companies.

Even MaxLinear’s legal counsel had been in communication with the Chinese antitrust regulatory authority, emphasizing the urgency of obtaining approval for the acquisition. This indicates that MaxLinear was eager to close the deal before the specified deadline.

Adding to the confusion, MaxLinear had been provided with a draft of Silicon Motion’s press release announcing its second-quarter results for 2023. At no point did MaxLinear raise any concerns about these results or suggest that they constituted a material adverse effect.

The situation took an unexpected turn when Silicon Motion received congratulations from its executives upon receiving approval from the Chinese antitrust regulatory authority. However, just ten hours after this approval was announced, Silicon Motion received the termination letter from MaxLinear. This came as a complete shock to Silicon Motion and its stakeholders, who had been working collaboratively with MaxLinear since May 2022 to finalize the transaction.

In response to MaxLinear’s purported termination and material breach of the merger agreement, Silicon Motion intends to pursue arbitration for substantial damages exceeding the termination fee. This arbitration will take place at the Singapore International Arbitration Centre, as stipulated in the Merger Agreement.

The details surrounding MaxLinear’s sudden termination of the agreement remain unclear, leaving many questions unanswered. As the arbitration process unfolds, it is hoped that a clearer picture will emerge, shedding light on the motivations behind MaxLinear’s actions and the potential consequences for both companies involved.

Background Information

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About MaxLinear:

MaxLinear is a fabless semiconductor company that provides systems-on-chip (SoC) solutions used for broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications

  

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