Maxlinear announced the acquisition of Huirong Technology for a total consideration of approximately $3.8 billion

Abstract: On the evening of May 5, Beijing time, the US chip manufacturer MaxLinear and the NAND flash controller manufacturer Silicon Motion announced today that they have reached a final agreement, MaxLinear will acquire Silicon Motion in cash and stock transactions, and the combined company's enterprise value is $8 billion.

On the evening of May 5, Beijing time, the US chip manufacturer MaxLinear and THE NAND flash controller manufacturer Silicon Motion announced today that they have reached a final agreement that MaxLinear will acquire Silicon Motion in cash and stock transactions, and the enterprise value of the merged company is 8 billion US dollars.

Under the terms of the final agreement, the transaction consideration will include $93.54 in cash and 0.388 maxLinear shares per Silicon Motion ADS and $23.385 in cash and 0.097 maxLinear common shares per Silicon Motion common stock (not representing ADS). Upon completion of the transaction, MaxLinear shareholders will own approximately 86 percent of the combined company and Silicon Motion shareholders will own approximately 14 percent of the combined company. Based on the closing price of MaxLinear shares on May 4, 2022, the implied value of Silicon Motion's total transaction consideration is $3.8 billion.

MaxLinear intends to pay $3.1 billion in cash consideration with cash from the combined company and Wells Fargo's full debt financing. The deal, which is not subject to any financing conditions, is expected to close in the first half of 2023, but will need to meet regular closing conditions, including approvals from Silicon Motion shareholders and regulatory approvals from various jurisdictions.

MaxLinea said it expects the combined enterprise size to provide additional technology, resources and capabilities to accelerate product innovation, improve operational efficiency and reduce manufacturing costs. Together, MaxLinear and Silicon Motion will expand resources to better support the combined company's broad customer relationships and long-term storage needs. The transaction is expected to generate at least $100 million in annual operating efficiency synergies within 18 months of closing and is expected to immediately and substantially increase MaxLinear's non-GAAP earnings per share and cash flow.

Dr Kishore Seendripu, Chairman and CEO of MaxLinear, said: "Today's announcement is a celebration of the merger of two companies that have driven significant innovation in their respective industries for more than a decade. "The combined organization has expanded in size, creating a new player worth more than $2 billion in the semiconductor industry, with a compelling position in a diverse end market." MaxLinear has demonstrated a proven track record of successful integration and expects this combination to generate strong growth, impressive operating margins and significant cash flow. ”

"For 20 years, we've been driving innovation, partnering with all of our valued customers and supporting our colleagues around the world," said Wallace Kou, President and CEO of Silicon Motion. "The combination of Silicon Motion and MaxLinear has created significant economies of scale, accelerated our expansion into the enterprise storage market, and combined with unparalleled intellectual property, continues to provide our clients with high-quality expertise and technical support." This transaction will bring attractive value to shareholders, enabling our company to achieve our growth goals and enhance our position in the high-growth storage end market." We are excited to work with the MaxLinear team to take the combined company to the next level." ”

Affected by the news, MaxLinear's U.S. stock price fell nearly 18% after the opening of the market on May 5, and as of 22:30 beijing time on May 5, it still fell nearly 16%, with a market value of about $3.49 billion. In contrast, Silicon Motion's U.S. stock price rose nearly 20% at one point after the opening, and as of 22:30 Beijing time on May 5, it was still up 17%, with a market value of about $3.27 billion.

MaxLinear（MXL.US）

MaxLine, Inc. provides RF, high-performance analog and mixed-signal communication systems—on-chip solutions for networked homes, wired and wireless infrastructures, and industrial and multi-market applications. Its products include cable broadband modems and gateways, wired connection devices, RF transceivers, fiber optic modules, video set-top boxes and gateways, analog and digital hybrid televisions, outdoor and indoor units for direct satellites, and power management and interface products. Founded on September 25, 2003 by Imura Kimihiko, Curtis C. Ling, and Kishore V. Seendrigu, the company is headquartered in Carlsbad, California. According to the financial report data, MaxLinear's revenue in 2021 was $892 million and net profit was $42 million.

Huirong Technology (SIMO.US)

Founded in November 2005 and headquartered in Hong Kong, Huirong Technology is the world's largest supplier of NAND Flash control chips and the largest supplier of SSD master control chips, with more than 20 years of design and development experience, providing industry-leading high-performance storage solutions for SSDs and other solid-state storage devices, including data centers, personal computers, smartphones, commercial and industrial control applications. Huirong Technology's memory control chips support a variety of NAND Flash flash memory produced by Intel, Kioxia, Micron, Samsung, SK Hynix, Western Digital and YMTC. Huirong Technology said that its customers are all over the world, including all NAND Flash factories, storage module factories, large data centers and other OEM manufacturers. According to its huirong technology's financial report, revenue in the fourth quarter of 2021 soared by 84% year-on-year, and revenue increased by more than 71% in 2021, with a net profit of 219 million US dollars (about 1.42 billion yuan).

Editor: Xin ZhiXun - Lin Zi