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Technology Stocks : Silicon Motion Inc. (SIMO)
SIMO 67.76-0.1%3:59 PM EDT

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From: Elroy6/17/2022 7:31:41 PM
   of 2592
 
SIMO share price is down to $84 despite indications that MXL will buy SIMO for $95.50 cash + 0.388 MXL shares per SIMO share.

My hunch is the increase in interest rates perhaps makes the deal less likely to go through? MXL was going to borrow about $3 billion to do the cash portion of the deal. Maybe they will have to pay quite a lot higher interest rate on that loan than anticipated.

Interesting.

If MXL walks away from the deal they need to pay SIMO $160m break up fee. That's not too shabby.

There are still at least 8 months before the deal closes, and I guess rates could go anywhere in the meantime, but it seems like interest rates are going up, and I imagine at some point there is an interest rate that makes this deal unattractive to MXL......maybe, hard to say! The cash generation of the two companies probably won't be affected much by increased interest rates, so even if the interest rate on the loan is higher than expected MXL's ability to pay down the loan should be similar.

Interesting interesting. My guess is the deal goes through, but the market seems to be having increased concerns that it may not.
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