Reports from South Korea say that MagnaChip received a letter of intent (LOI) from the LX Group to acquire the company. According to the article, the deal price is around $1.2 billion, or $26.50 per share. However, these buyout figures are likely to change in the weeks ahead. We expect a deal price between $25 - $30 per share to be announced soon. Once a deal is announced it will need to go through the regulatory approval process.

Several news outlets are suggesting that the LX Group's subsidiary, LX Semicon, would like to expand its offerings in the area of display driver IC's (DDICs) and silicon carbide (SiC)-based automotive power chips. Acquiring Maganachip would enable LX Semicon to add DDIC patents and manufacturing facilities to its existing portfolio.

This article provides details on the deal’s financing including participation by The Carlyle Group which would invest $300 million. According to reports, MagnaChip is fielding acquisition offers from other interested parties including Hahn & Co., Littelfuse, and NVC Partners.

In our most recent update on MagnaChip published on May 4th we said:

“A Letter Of Intent (LOI) to acquire MagnaChip could come any day from LX Group or another interested party. We continue to view shares of MagnaChip as attractive for purchase in the $18s (or lower) and we expect an eventual buyout offer will be announced at an acquisition price of $25/sh or more.”

As of today, MagnaChip has not confirmed any deal agreement. We think MagnaChip shares are likely to trade higher into the low-to-mid $20s when details of the rumored acquisition are confirmed by management and disclosed to investors in the coming weeks, if not sooner. We will post ongoing updates regarding this special situation as details emerge.

Below are our prior posts regarding the MagnaChip special situation:

May 4 2022

Brinker Stock Advisor

MagnaChip [MX] :: Q1 update and buyout reports

MagnaChip reported first quarter earnings this week. The company reported revenue of $104 million and non-GAAP EPS of $0.28 cents per share, up 27% year-over-year. MagnaChip’s business remains supply-constrained and the company is focusing efforts on its high margin business. Gross profit margin increased to 37.5% during the quarter, up 250 basis points from the prior quarter and 960 basis points year over year…

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3 months ago · 4 likes · 1 comment · Bob Brinker

March 16 2022

Brinker Stock Advisor

MagnaChip[MX] : All signs point to another sale

We first wrote about the MagnaChip opportunity in December 2021 after their $1.4 billion sale to Wise Road Capital fell apart. Soon after that, we wrote about the $75 million stock buyback plan which included a $37.5 million accelerated buyback. This week we…

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5 months ago · 12 likes · Bob Brinker

January 7th 2022

Brinker Stock Advisor

MagnaChip :: MX 3.0 update

Today MagnaChip held its conference call to update its MX 3.0 strategy and capital allocation plan. Before we delve into the call, I want to mention that the company recently announced the departure of its CFO at year-end 2021. The new CFO, Shinyoung Park, formerly served as the Chief Accounting Officer and has been with the company since 2014. We do not like to see senior executive changes, but in this case, the transition should be smooth with an experienced internal candidate filling the role…

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7 months ago · 7 likes · 1 comment · Bob Brinker

December 21st 2021

Brinker Stock Advisor

MagnaChip [MX] announces accelerated buyback plan

Today MagnaChip announced a $75 million accelerated buyback plan. Importantly, this buyback plan is funded with the $70.2 million deal-break fee MagnaChip is collecting from Wise Road Capital. At today’s closing price, the $75 million buyback represents approximately 8.5% of total MX shares outstanding…

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8 months ago · 6 likes · Bob Brinker

December 16th 2021

Brinker Stock Advisor

MagnaChip[MX] : recently terminated merger agreement presents a special situation

The recent termination of the merger agreement between Wise Road Capital and MagnaChip (Symbol: MX) presents an attractive, high-risk, opportunity for investors. Here is the recent news [ source ] Magnachip and Wise Road Capital Announce Withdrawal of CFIUS Filing and Mutual Termination of Merger Agreement…

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8 months ago · 8 likes · Bob Brinker