Mellanox has offered $25.5 per share in cash for all of EZchip’s common shares, creating a transaction value of approximately $811 million (approximately $620 million net of cash).
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About 5.3 million shares of EZchip were traded by 3:38 p.m. Wednesday, well above the company’s average trading volume of about 140,000 shares a day.
Whereas Mellanox is focused on high-speed data center connectivity hardware (e.g. adapter cards, switches, switching and adapter ICs), EZchip still gets the majority of its revenue from NPUs going into edge routers and other telecom hardware.
By buying EZchip the company intends to extend the scope of arrangements it gives clients, adding EZchip’s Ethernet network processors to the rundown, Calcalist said. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Brean Capital upgraded EZchip Semiconductor from a “hold” rating to a “buy” rating and set a $23.00 target price for the company in a report on Thursday, August 13th. “We are looking forward to work together to build a successful company”. The stock has a market capitalization of $1.85 billion and a price-to-earnings ratio of 71.82. The Organization ‘s subsidiary companies include EZchip Technologies Ltd., EZchip Inc. and EZchip Semiconductor Inc. “Together, we enable a multitude of layer 1 through 7 solutions for data centers and carriers”.
The acquisition is expected to close sometime in the first quarter of 2016. Mellanox, which sells solutions that enable servers, computers and databases to interconnect, expects the deal to be immediately accretive to adjusted earnings. The combined businesses will have 2,400 employees and have generated combined revenues of United States dollars 668 million for the twelve months to end June.
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J.P. Morgan acted as exclusive financial adviser in the deal and provided a financing commitment to Mellanox and Herzog Fox & Neeman and Latham & Watkins LLP acted as Mellanox’s legal counsel. Barclays acted as exclusive financial adviser to EZchip and Naschitz, Brandes, Amir & Co. and Carter Ledyard & Milburn LLP acted as EZchip’s legal counsel.
