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Semiconductor company Mellanox Technologies Ltd. has announced that it is buying fellow Israeli company Voltaire Ltd. for $218 million, or $8.75 per share ($176m. net of cash). The price represents a premium of 37 percent on Voltaire’s market price.
At the end of the third quarter, Mellanox had cash of $240m.
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 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 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 about 1.8 million in 2010 to 3.2 million in 2014.
The combined businesses currently have some 700 employees and achieved revenues of $217m. for the 12 months ended September 30.
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,” Mellanox Technologies president, chairman and CEO Eyal Waldman said in a statement.
“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. We welcome the
great talent from Voltaire and look forward to completing the
integration of our employees to create a superior combined company.”
Mellanox said the combination would also help it achieve annualized cost
synergies of at least $10m. by the end of 2012, and it intends to
combine employees from both organizations under one unified management
Mellanox’s board said it would 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.”