InsideArbitrage Event Driven Monitor – July 27, 2023

  • July 27, 2023
We experienced a highly unusual event in the risk arbitrage world today. The acquisition of Silicon Motion Technology (SIMO) by Maxlinear (MXL) was trading at a massive spread as most semiconductor deals that require approval by China’s State Administration for Market Regulation (SAMR) agency, tend to do. The spread on the cash plus stock deal was 104.3% on Tuesday. The spread narrowed significantly on Wednesday morning as SAMR suddenly granted conditional approval for the deal. The price of SIMO shot up from $52.20 at the close on Tuesday to $94.20 at the open on Wednesday. Unfortunately, later the same day, MaxLinear indicated that they were going to terminate the merger for various reasons outlined in this SEC filing. The stock promptly dropped back down to $65.35 and the spread on the deal is back up to 60.72%. We are not marking the deal as failed because the parties are very likely to end up in court. We will be covering the situation in more detail in our next Merger Arbitrage Mondays article. The news was not all bad today as another deal that was expected to run into regulatory issues, L3Harris’ acquisition of Aerojet Rocketdyne (AJRD), managed to avoid getting blocked...

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