By Dean Seal
Silicon Motion Technology has recently announced the termination of its merger agreement with MaxLinear. This decision comes after MaxLinear claimed to have terminated the agreement last month. Silicon Motion intends to pursue damages as a result of this dispute.
Silicon Motion, headquartered in Taipei, stated on Wednesday that it is reserving its rights under the merger agreement to hold MaxLinear accountable for significant monetary damages that exceed the termination fee outlined in the deal.
The conflict between the chipmakers began on July 26th, the same day that the merger received approval from Chinese regulators. MaxLinear exercised its right to terminate the agreement, citing unmet closing conditions and an ongoing material adverse event involving Silicon Motion.
The following day, Silicon Motion disputed MaxLinear's termination, asserting that it did not suffer from a material adverse effect and expecting MaxLinear to fulfill its obligations under the agreement.
Silicon Motion has now chosen to terminate the deal and plans to address MaxLinear's termination through arbitration in Singapore as outlined in the terminated agreement.
According to Tim Gardner, counsel for Silicon Motion, MaxLinear's justification for terminating the agreement, claiming a material adverse effect, is unfounded. He mentioned that similar cases have been rejected under Delaware law, which governs this issue, when buyers attempt to withdraw from merger agreements at the last minute. Silicon Motion intends to seek damages that go beyond the agreed termination fee.
In premarket trading, MaxLinear shares have risen 2% to $22.41, while Silicon Motion shares have declined 2.6% to $56.50.
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