The EZchip acquisition is a step in Mellanox's strategy to become the leading broad-line supplier of intelligent interconnect solutions for the software-defined data centres. 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 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 centre, enterprise, telecom, database, financial services and storage environments.
"The synergies between EZchip and Mellanox create attractive opportunities. We expect our combined technologies, and product portfolios to deliver leading end-to-end intelligent interconnect and processing solutions to data centers and wide area networks", stated Eyal Waldman, president and CEO of Mellanox Technologies. "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 centre, 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 centre. The solutions from the combined company will enable data centre 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. As our second significant acquisition in Israel, we are confident in our ability to effectively integrate the talented teams from EZchip and Mellanox. We are looking forward to work together to build a successful company."
"Joining forces with Mellanox represents numerous synergies that create a true powerhouse for connectivity and processing. With Mellanox's leading layer 1 - 3 connectivity solutions for data centres and EZchip's leading layer 3 - 7 processing solutions for carrier networks, the two companies complement each other in technology, products, markets served and customers. Together, we enable a multitude of layer 1 through 7 solutions for data centres and carriers", stated Eli Fruchter, CEO of EZchip. "I want to thank our shareholders and customers for their trust in us and our outstanding employees for building a winning company, a company that started fifteen years ago with many competitors and no customers, and became a market leader with leading-edge technology and products. We are delighted to join the Mellanox team and look forward to working together to drive the combined companys further growth."
Mellanox and EZchip each believe that employees represent one of their most important assets. Mellanox looks forward to combining employees from both organisations. Mellanox intends to retain both companies' existing product lines, and will ensure continuity for customers and partners of both companies.
The combined businesses currently have approximately 2,400 employees, and have generated combined revenues of $668 million for the twelve months ended June 30, 2015.
The transaction is projected to close in the first quarter of 2016, subject to the completion of certain closing conditions. Mellanox expects the transaction to be non-GAAP accretive from day one.
Under the terms of the definitive agreement, EZchip shareholders will receive $25.5 for each ordinary share of EZchip that they hold at the closing of the transaction. Mellanox intends to fund the transaction with cash on hand from the combined companies and $300 million in fully-committed debt financing. The proposed acquisition is subject to customary closing conditions, including the receipt of applicable regulatory approvals and the approval of EZchip's shareholders.
In connection with the transaction, J.P. Morgan acted as exclusive financial adviser and provided a financing commitment to Mellanox and Herzog Fox & Neeman and Latham & Watkins LLP acted as Mellanox's legal counsel. Barclays acted as exclusive financial adviser to EZchip and Naschitz, Brandes, Amir & Co. and Carter Ledyard & Milburn LLP acted as EZchip's legal counsel.