Silicon Motion Terminates Merger Agreement with MaxLinear and Intends to Pursue Substantial Damages in Excess of the Agreement’s Termination Fee Due to MaxLinear’s Willful and Material Breaches of the Merger Agreement
- Silicon Motion terminates merger agreement with MaxLinear, potentially avoiding negative impact on stock price
- MaxLinear's alleged breaches of the merger agreement could lead to substantial damages and negatively affect Silicon Motion's stock price
Will Proceed with Arbitration in the Singapore International Arbitration Centre, as Dictated by the Parties’ Merger Agreement
Notified MaxLinear of its Position that MaxLinear’s Willful and Material Breaches of the Merger Agreement Prevented the Merger from Being Completed by the Outside Date
TAIPEI, Taiwan and MILPITAS, Calif., Aug. 16, 2023 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (NASDAQGS: SIMO) (“Silicon Motion” or the “Company”) today issued a written notice to MaxLinear, Inc. (NASDAQGS: MXL) (“MaxLinear”), terminating the Agreement and Plan of Merger between the parties dated as of May 5, 2022 (the “Merger Agreement”1).
Silicon Motion’s position is that MaxLinear’s Willful and Material Breaches (as such term is defined in the Merger Agreement) of the Merger Agreement prevented the merger from being completed by August 7, 2023 (the “Outside Date”). Silicon Motion reserves all of its contractual, legal, equitable, and other rights under the Merger Agreement and otherwise, including but not limited to the right to hold MaxLinear liable for substantial money damages, well in excess of the termination fee as provided in the Merger Agreement, suffered by Silicon Motion as a result of MaxLinear’s Willful and Material Breaches of the Merger Agreement.
Pursuant to Section 7.1(d) of the Merger Agreement, the Company has the right to terminate the Merger Agreement if the completion of the merger contemplated by the Merger Agreement (the “Merger”) did not occur on or before the “Outside Date”.
Tim Gardner, partner of Weil, Gotshal & Manges LLP, counsel to the Company, commented as follows:
“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. MaxLinear’s professed reason for terminating the agreement – that Silicon Motion suffered a Material Adverse Effect (“MAE”) – is a pretext and has been rejected in case after case under Delaware law, which governs the MAE issue, where buyers have sought to back out of merger agreements at the eleventh hour. The damages Silicon Motion will seek to recover far exceed the termination fee.”
The Company also announced that it intends to resume its policy of declaring and paying dividends on an annual basis, at the discretion of its Board of Directors, after the termination of the Merger Agreement, which restricted the Company’s ability to declare and pay any dividend.
“We are resuming Silicon Motion’s annual dividend policy because of the resilience of our business, strength of our balance sheet and our continuing commitment to return capital to our shareholders,” said Wallace Kou, President and CEO of Silicon Motion.
The Company‘s decision to declare any dividend, and the timing and amounts thereof, will be subject to discretion and approval of the Board of Directors and will depend on, among other things, whether the dividend payment is in the best interests of our shareholders, business visibility, results of operations, capital availability and future capital requirements, financial condition, statutory requirements, and other factors that the Board may deem relevant.
About Silicon Motion
Silicon Motion is the global leader in supplying NAND flash controllers for solid state storage devices. Silicon Motion supplies more SSD controllers than any other company in the world for servers, PCs and other client devices and is the leading merchant supplier of eMMC and UFS embedded storage controllers used in smartphones, IoT devices and other applications. Silicon Motion also supplies customized high-performance hyperscale data center and specialized industrial and automotive SSD solutions. Silicon Motion’s customers include most of the NAND flash vendors, storage device module makers and leading OEMs. For further information on Silicon Motion, visit www.siliconmotion.com.
Cautionary Statement Regarding Forward-Looking Statements:
Information provided in this press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Silicon Motion’s current expectations, estimates and projections about the expected date of closing of the Merger and the potential benefits thereof, its business and industry, management’s beliefs and certain assumptions made by Silicon Motion, all of which are subject to change. The forward-looking statements include, but are not limited to, statements about the expected timing of the Merger, the satisfaction or waiver of any conditions to the proposed Merger and other events relating to the proposed Merger, and in some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “potentially”, “continue,” “could,” “seek,” “see,” “would,” “might,” “continue,” “target” or the negatives of these terms or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Although such statements are based on Silicon Motion’s own information and information from other sources Silicon Motion believes to be reliable, you should not place undue reliance on them and caution must be exercised in relying on forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, the risk that the Merger may not be completed on the anticipated terms and timing, in a timely manner or at all, which may adversely affect Silicon Motion’s business and the value of the ordinary shares, par value
Silicon Motion Investor Contacts:
Jason Tsai
jason.tsai@siliconmotion.com
Selina Hsieh
ir@siliconmotion.com
Media Contact:
Dan Scorpio, H/Advisors Abernathy
Dan.scorpio@h-advisors.global
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1 Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Merger Agreement.
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