Both Israeli semiconductor companies will merge in a deal where Mellanox will buy 100% of EZchip’s shares. This is the 2nd largest Israeli hi-tech exit of 2015
Mellanox, a leading supplier of interconnect solutions, announced on Wednesday that it will buy 100% of the shares of EZchip, which helps data center networks increase processing speeds, for a reported $811 million at a cash purchase price of $25.5 per share. This makes EZchip the second largest acquisition so far in Israel this year, with the largest exit being medical device company HeartWare’s acquisition of Valtech for nearly $1 billion earlier this month.
This acquisition also further demonstrates Israel’s prowess in semiconductor companies. Of the four largest Israeli tech buyouts this year, two have been semiconductor startups, the other one being Amazon’s acquisition of Annapurna Labs for $370 million. In 2014, the semiconductor sector actually garnered more than a third of Israel’s total hi-tech exits, landing $5.7 billion of a total $15 billion made in tech startup acquisitions, making it the most successful field in Israeli hi-tech exits for that year: Perhaps 2015 will be similar.
The deal keeps all employees in Israel, increases performance of data processing solutions
This deal, which will be completed in the beginning of 2016, will see the companies merge as one, keeping all 2,400 employees in Yokneam, Israel, where both businesses are based. In a world where data processing speeds are ever more important, the acquisition will enable Mellanox to offer higher performance solutions for Internet, Big Data, telecom, security, and storage uses.
Eyal Waldman, president and CEO of Mellanox Technologies, explained the benefits of the deal in a press release. “The new and emerging Web 2.0 and cloud applications that influence our day-to-day lives depend on fast data movement and processing. Mellanox’s interconnect provides the fastest and most-scalable solution for moving data within the data center, allowing the continuous development, use and expansion of these applications. EZchip’s processing solutions allow users to process and analyze, at wire speed, data both within and outside the data center. The solutions from the combined company will enable data center customers to meet the growing demands of data-intensive applications. We expect that the acquisition of EZchip’s technologies and team will better position us to offer further capabilities for smarter interconnect and processing solutions at 100Gb/s and beyond.”
This marks Mellanox’s second acquisition in Israel, the first being Integrity Project in 2014.