In a dramatic intraday reversal of a long-pending deal, the chip company
announced late Wednesday that it had terminated its pending acquisition of Silicon Motion Technology.
Earlier in the day, shares of Silicon Motion, which makes controllers used with flash-based storage devices, soared after China’s State Administration for Market Regulation approved the deal with conditions, according to a translation of a notice on the agency’s webpage. A few hours later, MaxLinear called the whole thing off.
More than 14 months ago, MaxLinear had announced an agreement to acquire Silicon Motion Technology. Terms called for MaxLinear (ticker: MXL) to pay $93.54 a share in cash and 0.388 shares of common stock for each American depositary share of Silicon Motion (
), which is based in Hong Kong.
The two companies said in announcing the deal that the transactions would “drive transformational scale, create a diversified technology portfolio, significantly expand the combined company’s total addressable market, and create a highly profitable cash generating semiconductor leader.”
A key stumbling block for the transaction was winning approval from Chinese regulators. As of Tuesday’s close, Silicon Motion shares were trading at $52.20, about a 50% discount to the deal price. Early Wednesday, Silicon Motion shares were 78% higher to $92.93, while MaxLinear had fallen 21% to $26.72.
In a press release late Wednesday, MaxLinear said that it terminated the deal because “certain conditions to closing set forth in the merger agreement are not satisfied and are incapable of being satisfied.”
MaxLinear also said Silicon Motion “has suffered a Material Adverse Effect that is continuing,” a reference to deteriorating business conditions at the company. And it said that Silicon Motion “is in material breach of representations, warranties, covenants, and agreements” in the Merger pact that gives MaxLinear the right to terminate.
Silicon Motion shares closed Wednesday’s regular session at $65.35, up 25.2%, but well below earlier highs. MaxLinear dropped 13% to $29.61, but well off the lows earlier in the session.
Shares of Silicon Motion were down 6% in late trading after the termination announcement. MaxLinear was off 14%.
Write to Eric J. Savitz at firstname.lastname@example.org