California-headquartered MaxLinear, Inc. (MXL) and Taiwan-based Silicon Motion (SIMO), on Thursday announced that they have entered into a definitive agreement under which MaxLinear would acquire Silicon Motion in a cash and stock transaction that values Silicon Motion at $3.8 billion and the combined company at $8 billion.
MaxLinear is a provider of radio frequency (RF), analog and mixed-signal integrated circuits for broadband, connectivity, and infrastructure markets. Silicon Motion (SIMO), specializes in NAND flash controllers for solid state storage devices.
The consideration represents a 48 percent premium to the undisturbed market value as of April 22, 2022. Upon closure, MaxLinear shareholders would be owning approximately 86 percent of the combined company and the rest by Silicon Motion stockholders.
Each American Depositary Share (ADS) of Silicon Motion, which represents four ordinary shares of Silicon Motion, would receive $93.54 in cash and 0.388 shares of MaxLinear common stock, for a total per ADS consideration of $114.34, based on MaxLinear's closing price as on May 4, 2022. For ordinary shares not represented by an ADS, the consideration would be $23.385 in cash and 0.097 shares of MaxLinear common stock.
The merger is expected to expand the combined company's total addressable market to $15 billion, with revenues of more than $2 billion. It is also expected to generate annual run-rate synergies of at least $100 million, to be realized within 18 months after the transaction closes.
The acquisition is expected to add to MaxLinear's earnings.
MaxLinear intends to fund the $3.1 billion of cash consideration with cash on hand from the combined companies and fully committed debt financing from Wells Fargo Bank, N.A.
BMO Capital Markets Corp. is acting as exclusive financial advisor to MaxLinear, and Wilson Sonsini Goodrich & Rosati, P.C. is acting as legal advisor.
Wells Fargo Bank, N.A. is providing committed debt financing for the transaction.
Goldman Sachs (Asia) L.L.C. is acting as exclusive financial advisor to Silicon Motion and Latham & Watkins LLP and K&L Gates are acting as legal advisors.
Shares of MaxLinear, Inc. are currently trading in pre-market at $46.71, down $6.90 or 12.87 percent from the previous close.
Shares of Silicon Motion Technology Corporation are currently trading in pre-market at $93.78, up $12.58 or 15.49 percent from the previous close.
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