Silicon Motion falls after terminating its sale to MaxLinear (update)
Aug. 16, 2023 4:56 PM ET Silicon Motion Technology Corporation (SIMO), MXLBy: Joshua Fineman, SA News Editor 5 Comments
 SweetBunFactory
Update 4:55pm: Updates shares, adds MaxLinear comment
Silicon Motion (NASDAQ: SIMO) dropped 6.2% after it formally terminated its sale to MaxLinear (NASDAQ: MXL) after MXL said it was exiting the transaction last month. MXL rose 6.4%.
Silicon Motion ( SIMO) said it plans to pursue "substantial" damages in excess of the agreement's termination fee due to MaxLinear's ( MXL) "willful and material" breaches of the merger agreement, according to a statement on Wednesday. SIMO will proceed with arbitration in Singapore.
The company plans to resume its policy of declaring and paying dividends on an annual basis, Silicon Motion added in the statement.
“MaxLinear’s purported termination of its Merger Agreement with Silicon Motion will be the subject of an arbitration for substantial damages in the Singapore International Arbitration Centre, as provided under the parties’ agreement," Tim Gardner, partner of Weil, Gotshal & Manges, an attorney for Silicon Motion ( SIMO), said in the statement.
MaxLinear ( MXL) responded to Silicon Motion's ( SIMO) statement on Wednesday, and said that it believes any such action by SIMO to pursue monetary damages is "without merit" and the company will "vigorously" defend its right to terminate the deal without penalty in arbitration, according to a press release.
"MaxLinear remains entirely confident in its decision to terminate the agreement," the company said in the statement.
The latest update comes after Silicon Motion ( SIMO) said last Monday it " categorically" rejected MaxLinear's ( MXL) purported termination of the deal to combine the two semiconductor companies.
Late last month, MaxLinear ( MXL) said it exercised its contractual rights to terminate its $3.8 billion planned purchase of Silicon Motion ( SIMO), saying SIMO suffered a material adverse effect," and is in material breach of representations, warranties, and covenants.
The MaxLinear ( MXL) termination came after the companies received antitrust approval from China for the deal, the last hurdle for the transaction to be completed.
"The damages Silicon Motion will seek to recover far exceed the termination fee," Gardner added. |
