There has not been much news on the MagnaChip special situation over the past several weeks as the share price has slowly dripped lower from $20 to $13 in sympathy with the semiconductor sector selloff.

Until Today.

Today we learned via reporting that LX Group has completed its due diligence on MagnaChip and it faces a July 15th deadline to submit an offer to JP Morgan. Here is a google translation of the reporting:

According to the industry on the 7th, it is known that LX Group has recently completed due diligence on Magnachip and completed the CEO report on the same day. LX Group must present an acquisition proposal to JP Morgan, the U.S. agency in charge of the sale, by the 15th. This is because the deadline was set to the middle of this month when the letter of intent (LOI) was submitted in May.

With this, only Koo Bon-joon's decision remains. It is known that the results of the due diligence will be reported to the Koo Chairman at the earliest tomorrow or early next week at the latest.

Until now, it is likely that LX Group will participate alone without partnering with financial investors (FIs). Although some FIs contacted LX Group, it is understood that the merger and affiliation did not take place. LX Semicon, which will be the subject of the acquisition, has enough cash to take over as it has about 600 billion won in cash.

MagnaChip shares jumped 10% on the news back over the $15 level. Given the recent weakness in the stock market, especially semiconductor stocks, we think the price for a deal is lower than it was 6 months ago. We now expect a transaction in the low-$20s.

We will post an update on this special situation as soon as a deal is announced.

Brinker Advisor

MagnaChip [MX] :: Deal or No Deal