MaxLinear to Acquire $922 Million Silicon Motion for $3.8 Billion

MaxLinear, Inc., provider of radio frequency (RF), analog and mixed-signal integrated circuits for broadband, connectivity, and infrastructure markets, and Silicon Motion Technology Corporation, in NAND flash controllers for SSDs, have entered into a definitive agreement under which MaxLinear will acquire Silicon Motion in a cash and stock transaction that values the combined company at $8 billion in enterprise value.

In the merger, each American Depositary Share (ADS) of the acquired company, which represents 4 ordinary shares of Silicon Motion, will receive $93.54 in cash and 0.388 shares of acquirer’s common stock, for total per ADS consideration of $114.34 (based on MaxLinear’s May 4, 2022 closing price).

The business combination is anticipated to drive transformational scale, create a diversified technology portfolio, expand the combined company’s total addressable market, and create a profitable cash generating semiconductor company.

Upon completion of the acquisition, the combined company will have a diversified technology platform with strong positions across the broadband, connectivity, infrastructure, and storage end markets. The combination of MaxLinear’s RF, analog/mixed-signal, and processing capabilities with Silicon Motion’s market NAND flash controller technology completes a total technology stack which captures end-to-end platform functionality and accelerates the company’s expansion into enterprise, consumer, and other adjacent growth markets.

Combined revenues are expected to be more than $2 billion annually and are supported by the technology breadth to address a total market opportunity of roughly $15 billion.

The combined scale is expected to provide additional technology, resources, and capabilities to accelerate product innovation, improve operational efficiency and drive lower manufacturing costs. Together, the 2 companies will have expanded resources to better support the combined company’s customer relationships with their long-term storage requirements.

The transaction is expected to generate annual run-rate synergies of at least $100 million to be realized within 18 months after the transaction closes and is expected to be immediately and materially accretive to MaxLinear’s non-GAAP earnings per share and cash flow.

“Today’s announcement celebrates the combination of 2 companies that have driven significant innovation in their respective industries for over a decade,” said Kishore Seendripu, Ph.D., chairman and CEO, MaxLinear. “The enhanced scale of the combined organization creates a new significant $2 billion+ player in the semiconductor industry with compelling positions across a diversified set of end-markets. MaxLinear has demonstrated a strong track record of integration success and looks for this combination to create robust growth, impressive operating margins and significant cash flows.“

“For 20 years, we have built Silicon Motion with a commitment to advancing innovation, partnering with all of our valued customers and supporting our colleagues around the world,” said Wallace Kou, president and CEO, Silicon Motion. “Combining Silicon Motion with MaxLinear creates significant economies of scale, accelerates our expansion into enterprise storage markets and unites unparalleled IP to continue serving our customers with high-quality expertise and technical support. This transaction will deliver compelling value for shareholders, position our company to achieve our growth objectives and advance our position in high-growth storage end markets. We are very excited to partner with the MaxLinear team to take the combined company to the next level.“

Transaction Structure and Terms
Under the terms of the definitive agreement, the transaction consideration will consist of $93.54 in cash and 0.388 shares of MaxLinear stock for each Silicon Motion ADS (American Depositary Share) and $23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS. Upon closing of the transaction, MaxLinear shareholders will own approximately 86% of the combined company and Silicon Motion stockholders will own approximately 14% of the combined company. Based on the closing price of MaxLinear shares on May 4, 2022, the implied value of the total transaction consideration for Silicon Motion is $3.8 billion.

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. The transaction is not subject to any financing conditions and is expected to close by 1H23, pending satisfaction of customary closing conditions, including Silicon Motion shareholders’ approval and regulatory approvals in various jurisdictions.

Advisors and Financing Sources
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.

About MaxLinear, Inc.
It is a provider of radio frequency (RF), analog, digital and mixed-signal integrated circuits for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications. <it is headquartered in Carlsbad, CA.