Semiconductor company Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) has announced that it is buying fellow Israeli company Voltaire Ltd. (Nasdaq:VOLT) for $218 million, or $8.75 per share ($176 million net of cash). The price represents a premium of 37% on Voltaire's market price.
At the end of the third quarter, Mellanox had cash of $240 million.
The terms of the transaction have been unanimously approved by both the Mellanox and Voltaire boards of directors. The transaction is currently projected to close in the first quarter of 2011, subject to certain closing conditions.
Mellanox expects that the transaction will be accretive to its fiscal 2011 non-GAAP earnings by $0.02 - $0.05 or more per share.
Mellanox said that the combination of the two companies would strengthen its position as a premier, end-to-end connectivity solutions provider for the growing worldwide data center server and storage markets.
The company's announcement cites research by Gartner showing that worldwide server shipments are expected to increase from approximately 9 million in 2010 to 11.2 million in 2014, and worldwide storage systems are expected to grow from approximately 1.8 million in 2010 to 3.2 million in 2014.
The combined businesses currently have approximately 700 employees and achieved revenues of $217 million for the twelve months ended Sept. 30, 2010.
J.P. Morgan advised Mellanox in the transaction, and Bank of America Merrill Lynch advised Voltaire.
“The combination of Mellanox and Voltaire will create a leading provider of connectivity solutions for our customers by leveraging the complementary strengths of our companies. Together, we believe the combined company will be a stronger business partner and system solutions provider, delivering customers a comprehensive range of end-to-end connectivity solutions,” said Mellanox Technologies president, chairman and CEO Eyal Waldman “We welcome the great talent from Voltaire and look forward to completing the integration of our employees to create a superior combined company.”
Mellanox says it expects that the combination will also help it achieve annualized cost synergies of at least $10 million by the end of 2012, and that looks forward to combining employees from both organizations under one unified management team.
Mellanox’s board will nominate Voltaire chairman and CEO Ronnie Kenneth as a director.
“We believe this is a great transaction for our customers, employees and shareholders,” Kenneth said. “We expect the combined company to offer our customers the financial strength of Mellanox, industry-leading solutions and world-class development teams that drive innovation and enhance market opportunities.”
Mellanox and Voltaire will jointly conduct an audio webcast to discuss Mellanox's agreement to acquire Voltaire today at 5:30 a.m. Pacific Time.
Published by Globes [online], Israel business news - www.globes-online.com - on November 29, 2010
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