Leading storage control IC manufacturer SMI released a statement on the evening of the 16th, notifying American company Maxlinear that, due to its deliberate and significant breach of the merger agreement, the merger could not be completed before the final transaction deadline. In addition to seeking substantial compensation for losses from Maxlinear, SMI emphasized that the intentional and significant breach by the American company Maxlinear resulted in losses far exceeding the substantial amount specified in the merger agreement as termination fees. Consequently, in accordance with the mutually agreed upon terms, and based on legal counsel, the matter of seeking arbitration for the requested compensation for substantial damages will be submitted to the Singapore International Arbitration Centre.
SMI’s statement highlights that written notice has been sent to terminate the merger agreement signed between SMI and Maxlinear on May 5, 2022.
SMI Technology holds the belief that due to the intentional and significant breach by American company Maxlinear (as defined in the merger agreement), the merger process could not be completed before the final transaction deadline on August 7, 2023. SMI retains all rights bestowed upon the company under the merger agreement or other contracts, legal statutes, equitable laws, and others. This includes but is not limited to, the right to claim compensation from American company Maxlinear for the substantial financial losses incurred by SMI due to Maxlinear’s intentional and significant breach, which far exceeds the amount stipulated in the merger agreement as termination fees.
Furthermore, in accordance with Article 7.1(d) of the merger agreement, SMI has engaged the legal counsel of the company, Tim Gardner, a partner at the law firm Weijia Attorneys-at-Law, to provide advice. As stipulated in the bilateral agreement, the matter of seeking arbitration for the requested compensation for substantial damages will be submitted to the Singapore International Arbitration Centre.
In response to Maxlinear’s eleventh-hour withdrawal from the merger agreement, SMI affirms its strong commitment to seeking compensation for damages that greatly surpass the termination fee.
SMI also announces that following the termination of the merger agreement that imposes restrictions on the company’s declaration and distribution of dividends, the company’s policy of annually distributing dividends will be reinstated, with the full authority granted to the company’s board of directors to make decisions.
General Manager and CEO of SMI, stated, ‘Due to the rebound in our business, the robustness of our balance sheet, and our ongoing commitment to providing capital returns to shareholders, we will reinstate SMI’s annual dividend policy.‘
SMI further stated that decisions regarding dividend distribution, including the timing and amount of distribution, will be fully determined by the company’s board of directors. These decisions will be influenced by various considerations, including whether dividend payments align with the best interests of shareholders, business prospects, operational achievements, available funds, future funding requirements, financial conditions, legal obligations, and other factors deemed relevant by the board of directors.
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