MaxLinear's planned acquisition of Silicon Motion, valued at $3.8 billion, has taken a significant step forward as it secured approval from two Chinese regulators. However, before the deal can be finalized, it still needs clearance from China's antitrust regulator. Despite this hurdle, the market reacted positively, leading to a narrowing of the deal spread from $32.64 on Friday to $26.30 on Monday.
According to a report from Dealreporter, which cited sources familiar with the matter, both the National Development and Reform Commission and the Ministry of Industry and Information have given their support for the combination. This news comes as a significant boost for MaxLinear as it brings them one step closer to concluding the acquisition successfully.
While two Chinese regulators have granted their approval, the transaction's final approval hinges on the endorsement of the Taiwan Affairs Trade Office. Once that is secured, the State Administration for Market Regulation (SAMR) will need to review the deal. It is anticipated that SAMR may impose certain remedies or conditions before providing its final approval.
Despite the positive developments surrounding the acquisition, there remains uncertainty about whether SAM grant approval before the termination date of August 7. This creates a sense of urgency for all involved parties to work towards resolving any outstanding concerns and addressing any potential issues to ensure timely approval.
The stock market response was encouraging, with Silicon Motion witnessing a 7.6% jump in its stock price on Monday. Similarly, MaxLinear experienced a 1.1% increase in its stock price, indicating investor confidence in the deal's potential success.
This latest update follows reports from last week suggesting that MaxLinear and Silicon Motion are actively engaged in discussions to address industrial concerns related to the acquisition. Talks with relevant third parties are ongoing to ensure smooth implementation. Moreover, the parties have maintained an open dialogue with China's antitrust regulator throughout the process, further indicating their commitment to regulatory compliance and addressing any potential competition concerns.
While MaxLinear's acquisition of Silicon Motion still requires further approval, this recent development signals a positive step forward for the deal. The involvement and support of two Chinese regulators provide momentum, and discussions with other parties continue to shape a favorable outcome. Both companies are poised to leverage this progress to ensure a successful and mutually beneficial transaction.
