Silicon Motion Seeks Damages from MaxLinear

Silicon Motion is not taking the termination of its takeover deal with MaxLinear lightly. The company announced that it would be seeking damages beyond the agreed termination fee.

The deal, valued at around $4 billion, was initially announced in May but was abruptly called off by MaxLinear in July. MaxLinear cited "a material adverse effect" as the reason for terminating the agreement. However, Silicon Motion claims that this reason is merely a pretext and has been consistently rejected in similar cases under Delaware law, which governs the issue of Material Adverse Effect (MAE) in merger agreements.

According to the terms of the agreement, the termination fee was set at $160 million, with the possibility of being reduced to $120 million under certain circumstances. Silicon Motion seems determined to go beyond these provisions and seek additional compensation.

The company's statement demonstrates their conviction that MaxLinear's reasoning does not hold up under Delaware law and that they have seen similar attempts to back out of merger agreements thwarted in the past. Silicon Motion appears resolute in pursuing its claim for damages above and beyond the agreed termination fee.

The stage is now set for a potential legal battle between Silicon Motion and MaxLinear as they navigate the aftermath of their failed merger deal. Only time will tell how this dispute unfolds and what further actions may be taken.