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Silicon Motion Technology Corporation today disclosed additional details regarding MaxLinear's termination of its May 5, 2022 agreement to acquire the Company (the "Merger Agreement"). As previously disclosed, MaxLinear's July 26, 2023 notice of termination did not contain a factual basis for MaxLinear's claim that it was not obligated to close its acquisition of the Company because the Company's business had suffered a material adverse effect (as such term is defined under Delaware law (an "MAE")) and the Company had failed to operate its business in the ordinary course after the Merger Agreement was signed.
In the 15 months following the signing of the Merger Agreement, MaxLinear never once asserted, prior to sending its July 26, 2023 notice of termination, that there had been a material breach of the Merger Agreement, nor did it or its representatives ever mention an MAE or a breach of the ordinary course covenant.
To the contrary, in the weeks, days, and hours before the termination letter was sent:
MaxLinear informed Silicon Motion that it was requesting information to prepare for the integration of the two companies;
MaxLinear's counsel informed the PRC antitrust regulatory authority (the State Administration for Market Regulation, or SAMR), including as late as July 19, 2023, that PRC antitrust approval was urgent so that MaxLinear could close the acquisition prior to the Outside Date (as such term is defined under the Merger Agreement) on August 7, 2023; and
MaxLinear was provided with a draft of the Company's July 27 press release containing its second quarter 2023 results and, again, did not state that the results gave rise to an MAE, nor did it provide any comments on the results.
Upon receiving SAMR approval, Silicon Motion executives sent congratulatory messages to MaxLinear's CFO and CEO in anticipation of officially closing the transaction following receipt of this regulatory approval. Approximately 10 hours after SAMR announced its approval of the merger, Silicon Motion received the termination letter from MaxLinear. The termination letter came as a complete shock to the Company and its directors, officers, and employees who had worked cooperatively with their counterparts at MaxLinear since May 2022 to consummate the transaction.
MaxLinear's purported termination and material breach of its Merger Agreement with the Company will be the subject of an arbitration for substantial damages in excess of the termination fee in the Singapore International Arbitration Centre, as provided under the Merger Agreement.
View at TechPowerUp Main Site
In the 15 months following the signing of the Merger Agreement, MaxLinear never once asserted, prior to sending its July 26, 2023 notice of termination, that there had been a material breach of the Merger Agreement, nor did it or its representatives ever mention an MAE or a breach of the ordinary course covenant.
To the contrary, in the weeks, days, and hours before the termination letter was sent:
MaxLinear informed Silicon Motion that it was requesting information to prepare for the integration of the two companies;
MaxLinear's counsel informed the PRC antitrust regulatory authority (the State Administration for Market Regulation, or SAMR), including as late as July 19, 2023, that PRC antitrust approval was urgent so that MaxLinear could close the acquisition prior to the Outside Date (as such term is defined under the Merger Agreement) on August 7, 2023; and
MaxLinear was provided with a draft of the Company's July 27 press release containing its second quarter 2023 results and, again, did not state that the results gave rise to an MAE, nor did it provide any comments on the results.
Upon receiving SAMR approval, Silicon Motion executives sent congratulatory messages to MaxLinear's CFO and CEO in anticipation of officially closing the transaction following receipt of this regulatory approval. Approximately 10 hours after SAMR announced its approval of the merger, Silicon Motion received the termination letter from MaxLinear. The termination letter came as a complete shock to the Company and its directors, officers, and employees who had worked cooperatively with their counterparts at MaxLinear since May 2022 to consummate the transaction.
MaxLinear's purported termination and material breach of its Merger Agreement with the Company will be the subject of an arbitration for substantial damages in excess of the termination fee in the Singapore International Arbitration Centre, as provided under the Merger Agreement.
View at TechPowerUp Main Site