(Reuters) -Taiwan-based Silicon Motion on Wednesday blamed MaxLinear for breaching their merger agreement and said it would seek damages in excess of the termination fee from the U.S. company.
MaxLinear scrapped a nearly $4 billion cash-and-stock deal in July to acquire memory-controller maker Silicon Motion. The acquisition was announced in May last year.
MaxLinear may be required to pay Silicon Motion a termination fee of $160 million, according to the agreement in May last year. However, Silicon Motion would be liable to pay $132 million if the deal was terminated under some circumstances.
MaxLinear said Silicon Motion's action is without merit and it would "vigorously defend" its right to terminate the deal without paying a penalty in arbitration.
In July, MaxLinear had said the company had suffered a "material adverse effect", giving it the right to terminate the merger agreement.
"MaxLinear's professed reason .... is a pretext and has been rejected in case after case under Delaware law, which governs the MAE issue, where buyers have sought to back out of merger agreements at the eleventh hour," Silicon Motion said on Wednesday.
The company's termination of the deal will be subject of an arbitration in the Singapore International Arbitration Centre.
Silicon Motion also said the company intends to resume declaring and paying dividends on an annual basis.
(Reporting by Akash Sriram in Bengaluru, additional reporting by Sourasis Bose; Editing by Saumyadeb Chakrabarty and Anil D'Silva)