Silicon Motion Technology Corporation today issued a written notice to MaxLinear, Inc., terminating the Agreement and Plan of Merger between the parties dated as of May 5, 2022.
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. 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.
