MaxLinear (NASDAQ: MXL) recently announced its intentions to buy Silicon Motion (NASDAQ: SIMO) in a mixed cash-and-stock deal valued at roughly $3.8 billion. The tentative acquisition has created a merger arbitrage opportunity, which is a short-term investing strategy of buying stocks of companies trading below their acquisition price.
Silicon Motion's "spread," or the percentage gap between the stock's trading price and buyout price, is unusually high at 40%. Typically, a high spread indicates investors believe that the deal is unlikely to go through due to either regulatory concerns or a lack of shareholder support.
Still, here are three good reasons to invest in Silicon Motion and wait until mid-2023, when the company expects the deal to close.
For further details see:
3 Reasons for Investors to Like the MaxLinear-Silicon Motion Deal