MaxLinear has announced the termination of its planned acquisition of Silicon Motion Technology, a deal that had recently received approval from Chinese regulators.
In a securities filing on Wednesday, MaxLinear stated that certain closing conditions outlined in the merger agreement have not been met and are unlikely to be fulfilled. Additionally, it revealed that Silicon Motion is currently facing a significant adverse event, as defined in the agreement, and has breached several provisions of the deal.
The termination of the agreement comes after the expiration of the extended outside date on May 5, 2022. This deadline marked the point at which either party could opt to withdraw from the acquisition if it remained incomplete.
Interestingly, the announcement of the termination coincided with China’s State Administration for Market Regulation granting approval for the deal. This approval had initially seemed to pave the way for the transaction to proceed after more than a year of uncertainty.
Under the terms agreed upon on May 5th, 2022, MaxLinear was set to acquire Silicon Motion by paying $93.54 in cash and issuing 0.388 shares of common stock for each American depositary share of Silicon Motion.
Following news of China’s approval, Silicon Motion’s American depositary shares experienced a remarkable increase of over 81%, reaching $94.91 on Wednesday. In contrast, MaxLinear’s shares plummeted by more than 20%, settling at $27.14.
Trading in both companies’ shares was temporarily halted upon the disclosure of MaxLinear’s termination notice.
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