By Dean Seal
MaxLinear and Silicon Motion Technology witnessed a decline in their stock prices during post-market trading following the termination of the acquisition agreement between the two firms.
MaxLinear’s stock experienced a 10% decrease, reaching $26.67 after hours. Earlier in the trading day, shares had fallen by 13%.
Silicon Motion’s Stock
Silicon Motion’s stock observed an 8% drop, reaching $60.15 after hours. However, shares had closed with a 25% increase.
Unexpected Turn of Events
Silicon Motion’s stock initially soared over 80% during the trading day when Chinese regulators approved the deal, igniting hope for its long-awaited closure, originally announced over a year ago.
However, just an hour before the market closed, MaxLinear revealed that it had terminated the merger agreement with Silicon Motion. This decision came as certain closing conditions stated in the agreement were not met and are now deemed impossible to satisfy.
MaxLinear further stated that Silicon Motion is faced with an ongoing material adverse event, as defined by the agreement, and is in substantial violation of the deal’s representations, warranties, covenants, and agreements.
Following the market’s closure, MaxLinear reported a loss in the second quarter as revenue dropped by 34% to $183.9 million. This figure fell short of analyst forecasts for $190.4 million, according to FactSet. Per-share adjusted earnings were recorded at 34 cents, surpassing analyst projections by one cent.