Israeli chip designer Mellanox to buy EZchip Semiconductor for $811 mn

Israeli chip designer Mellanox Technologies Ltd yesterday struck a deal to buy network communications chip maker EZchip Semiconductor Ltd for $811 million.

Under the terms of the deal approved by the boards of both companies, Mellanox has offered to pay $25.5 per share in cash, valuing the transaction at around $811 million.

The offer price represents a premium of 16 per cent to EZchip's Tuesday closing price.

Mellanox will fund the deal with cash on hand and $300 million in fully committed debt financing.

The combined companies currently have approximately 2,400 employees, and generated combined revenues of $668 million for the 12 months ended 30 June 2015.

Mellanox said that the acquisition is a step forward in becoming the leading broad-line supplier of intelligent interconnects solutions for the software-defined data centers.

''The addition of EZchip's products and expertise in security, deep packet inspection, video, and storage processing enhances Mellanox's leadership position, and ability to deliver complete end-to-end, intelligent 10, 25, 40, 50, and 100Gb/s interconnect and processing solutions for advanced data center and edge platforms,'' the company said in a statement.

''The combined company will have diverse and robust solutions to enable customers to meet the growing demands of data-intensive applications used in high-performance computing, Web 2.0, cloud, secure data center, enterprise, telecom, database, financial services and storage environments,'' the statement added.

EZchip is a fabless semiconductor company that provides high-performance processing solutions for a wide range of applications for the carrier, cloud and data center networks.

The Israel-based company's broad portfolio of solutions scales from a few to hundreds of Gigabits-per-second, and includes network processors, multi-core processors, intelligent network adapters, high-performance appliances and a comprehensive software ecosystem.

With a market value of $1.7 billion, Mellanox is a supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.

The California-based company offers fast interconnect products like adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.

Mellanox CEO, Eyal Waldman, said that the addition of EZchip will increase his company's total addressable market by $2.2 billion in 2017 to $14.5 billion and enable it to more effectively take advantage of the massive data centre opportunity.

"The new and emerging Web 2.0 and cloud applications that influence our day-to-day lives depend on fast data movement and processing," he said.