Maxlinear, a supplier of radio frequency (RF), analog and mixed signal integrated circuits for broadband, connectivity and infrastructure markets, and silicon motion, which provides NAND flash memory controllers for solid-state storage devices, announced today that they have reached a final agreement under which maxlinear will acquire silicon motion in cash and stock transactions, The combined company has an enterprise value of $8 billion**
In the merger transaction, each American depositary share (ads) of silicon motion (representing four ordinary shares of silicon motion) will receive $93.54 in cash and 0.388 maxlinear ordinary shares, with a total consideration of $114.34 per ads (based on maxlinear's closing price on May 4, 2022). This strategic business merger is expected to promote the scale of transformation, create a diversified technology portfolio, greatly expand the total addressable market of the merged company, and create a highly profitable semiconductor leader.
After the acquisition, the merged company will have a highly diversified technology platform and have influence in the broadband, connectivity, infrastructure and storage terminal markets. Maxlinear's RF, analog / mixed signal and processing capabilities are combined with silicon motion's NAND flash controller technology to complete a comprehensive technology stack, reflect the end-to-end platform functions, and accelerate the company's expansion to enterprises, consumers and many other adjacent growth markets. The combined revenue is expected to exceed $2 billion a year and is supported by the breadth of technology to leverage a total market opportunity of about $15 billion.
Maxlinear and silicon motion said that the combined scale is expected to provide more technology, resources and capabilities to accelerate product innovation, improve operational efficiency and promote the reduction of manufacturing costs. Having more resources together can better support the broad customer relationships of the merged company and meet their long-term storage needs. The transaction is expected to generate an annual operating synergy of at least US $100 million and will be realized within 18 months after the end of the transaction. It is expected to immediately have a significant impact on maxlinear's non GAAP earnings per share and cash flow.
According to the terms of the final agreement, the transaction consideration will include $93.54 in cash and 0.388 maxlinear shares per silicon motion ads (American Depositary Shares), and $23.385 in cash and 0.097 maxlinear ordinary shares per silicon motion ordinary shares (not representing ads). After the completion of the transaction, maxlinear shareholders will own about 86% of the shares of the merged company, and silicon motion shareholders will own about 14% of the shares of the merged company. According to the closing price of maxlinear shares on May 4, 2022, the implied value of the total trading consideration of silicon motion is $3.8 billion.
Maxlinear intends to pay $3.1 billion in cash consideration with the combined company's cash and Wells Fargo's full debt financing. The transaction is not subject to any financing conditions and is expected to be completed in the first half of 2023, but it needs to meet the usual closing conditions, including the approval of silicon motion shareholders and regulatory approval in various jurisdictions.