Chipmaker MaxLinear to buy Taiwan’s Silicon Motion for about $4 billion

-Chipmaker MaxLinear Inc said on Thursday it will buy Taiwan-based Silicon Motion Technology Corp for nearly $4 billion in a cash-and-stock deal, creating one of the largest fabless semiconductor suppliers in the world.

The combination will allow the merged entity to expand into enterprise, consumer and many other growth markets with more than $2 billion in combined revenue annually and total available market opportunity of $15 billion, the companies said.

U.S.-listed shares of Silicon Motion, which makes NAND flash controllers, rose 19.4% in early trade to a record high, while MaxLinear’s stock fell about 17%.

According to media reports, Qualcomm Inc rival MediaTek Inc was also interested in buying Silicon Motion, which Bloomberg News https://www.bloomberg.com/news/articles/2022-04-24/silicon-motion-is-said-to-explore-sale-amid-takeover-interest reported in April was working with advisors and holding talks with potential suitors amid takeover interest.

MaxLinear will pay $93.54 in cash and about 0.4 of its share for each Silicon Motion’s American depositary shares (ADS), representing a total consideration of $114.34 per ADS.

The offer is at a 41% premium to Silicon Motion’s Wednesday close of $81.2 and a 48% premium to its April 22 close, the last day of trading before news of a takeover interest was first reported.

MaxLinear will fund the deal with cash in hand and debt financing from Wells Fargo. The acquisition is expected to be immediately accretive to operating margins, earnings and cash flow levels, the companies said.

The deal is likely to close in the first half of 2023, after which MaxLinear’s shareholders will own about 86% of the combined company that will have an enterprise valuation of $8 billion.

BMO Capital Markets Corp acted as financial advisor to MaxLinear and Goldman Sachs (Asia) LLC to Silicon Motion on the deal.