January 20, 2016 / 10:25 AM / 2 years ago

Mellanox CEO to see immediate profit boost from EZchip deal

TEL AVIV (Reuters) - Its $811 million acquisition of EZchip Semiconductor EZCH.TA will add to Mellanox Technologies’ (MLNX.O) revenue and net profit immediately, Mellanox’s chief executive said on Wednesday.

The logo of Mellanox Technologies is seen on one of its office buildings in the northern Israeli town of Yokneam October 9, 2013. REUTERS/Nir Elias

A majority of EZchip’s shareholders on Tuesday voted in favor of the deal, paving the way for a sale that had been contested by activist shareholder Raging Capital Management.

The largest deal ever between two Israeli high-tech companies, it still requires regulatory approval and is expected to close in the second half of February, Mellanox CEO Eyal Waldman told Reuters.

“From day one we will earn more money from the deal,” Waldman said.

He has said that EZchip would increase Mellanox’s total addressable market by $2.2 billion in 2017 to $14.5 billion.

The deal comes at a time of consolidation in the global semiconductor industry, with companies combining to try to meet demand for cheaper chips and diversify.

Mellanox supplies products that enable databases, servers and computers to connect with each other.

Last September it announced that it would acquire EZchip, a maker of network processors, for $25.50 per share in cash.

Waldman reaffirmed Mellanox’s fourth-quarter outlook for revenue of $171 million to $176 million.

He said Mellanox would hire the vast majority of EZchip workers to create a combined company with 2,500 employees.

Editing by Sarah Young

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