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Magnachip stock soars on $1.4B go-private deal with Wise Road Capital

Mar. 26, 2021 8:44 AM ETMagnachip Semiconductor Corporation (MX)MXBy: Brandy Betz, SA News Editor16 Comments
  • Magnachip Semiconductor (NYSE:MX) has entered a definitive agreement to be acquired by Wise Road Capital in a go-private transaction valued at $1.4B, a 75% premium to Magnachip's three-month volume-weighted average share price.
  • MX shares are up 31% pre-market to $26.71.

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Comments (16)

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@rcray - $29 deal looks solid after MX clarified about the regulatory requirements or the lack of it. It will probably narrow the discount to about $28 unless another deal comes through which is quite possible with the low buyout price. Keep our fingers crossed.
with the $2/shr breakup fee, it has about $1 premium for the buyout which is insanely cheap. MX will reach over $30 this year on its own without any deal.
And if there is any sweeten deals, they would be over $30 for sure.
@PN88 MX sells for less than $ 26. People don't think the $ 29 deal is going to go through, nor will there be another, higher, offer. Stock traders and arbitragers don't normally throw away the chance to make $ 3 on a $ 26 investment in about 6 months (a 24 % annualized rate of return).
@rcray - it may work out better if the deal fell through... MX will get $100M breakup fee which is about $2 cash. MX is just gaining momentum as their margin will hit 30%... It will be a $30+ stock this year.
@rcray This deal will go through. China and S. Korea are huge trading partners going both ways. US doesn't have enough clout to influence the deal one way or the other. The $1.4B deal is so tiny and the company business/management will remain the same so there will be no impact to the supply market. Only difference is that the company will be owned by a group of private investors.

However, it is quite likely that more offers may come in from other parties... It is dirty cheap at $1.4B especially considering the $6 cash the company has. The sale is only $26 ex cash. IMO, even $36 is too cheap as an analyst estimated the company is worth $46.
I wonder if this will go through. Wise Road Capital is a Chinese (state?) company and semiconductors are a hot issue right now. Korea might have trouble blocking the deal because it would be easily subject to Chinese retaliation (like with the U.S. antimissile system it wanted to install) although the current President is rather leftish (willing to negotiate with North Korea for example). I would doubt the Biden administration would want this to go through. They could lean on South Korea or maybe find an American buyer willing to buy the company. However if Wise Road is backed by the Party it could outbid anybody else. Semiconductor technology is probably at the top of the Party's priorities.
the $29/$1.4B offer is ok, but not great. MX is worth more by itself. It has about $270M or $6 per share cash alone. I wouldn't be surprised to see $32 final price.
quite the spread 29 offer but trading below 26. free 11% plus potential other bidders. nice
No wonder so many have said AMD is a not a go anymore and to sell.
Great news for us shareholders. After my adventure with Coherent (selling after the initial announcement and then watching in frustration as a bidding war developed) I am going to wait before I sell out.

Wise road is an interesting buyer. They have a lot of companies in the field in their portfolio, so they definitely know what they are doing. They are however kind of sort of Chinese based. I wonder if Samsung or LG will make a bid to keep the company Korean.

Luckily, MX is presently Korean, so the merger cannot be blocked by the busybodies at the CFUIS.
They're getting it cheap. Hope this attracts competing bids.
abdulmoiz1254 profile picture
And now
Loads of scooping on my PF

Thanks @Rubyrubyruby
Adambombfx profile picture
Double Oy Vey !
Oy vey!

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