Quieted outrage over Israeli merger
The fiercely debated Mellanox-EZchip merger has just been approved, with 85 percent of shareholders agreeing to the deal. Both companies are based in Israel, Shiri Habib-Valdhorn at Globes wrote, where Mellanox CEO Eyal Waldman and EZchip CEO Eli Fruchter claim that this deal was first imagined while the two men used to eat dinner together in Yokneam.
Mellanox Technologies, which handles organizational data communications equipment, will buy EZchip Semiconductor, a producer of chips for network communications routers, for an agreed price of $811 million. The two companies announced the deal in late 2015. Raging Capital, an American-based investment company and minority shareholder of EZchip, was outraged. Much of its discontent centered around the nature of the deal, along with the $25.50 share price.
"By not creating a competitive bidding environment or even seriously entertaining alternatives, EZchip deprived shareholders of the opportunity to sell at the highest price," William Martin, the chairman and CIO of Raging Capital Management, wrote to his fellow shareholders. "While we do not think EZchip should be sold at all, when it decided to sell, the EZchip board had an obligation to run a rigorous process to maximize value and it failed to do so."
Due to this incident, Mellanox allowed EZchip to seek other buyout opportunities over a 30-day period. No other companies offered to acquire the chip company, so the deal was once again pursued. Since this time, Raging Capital has redacted its previous opposition to the merger.
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