Mellanox agrees to buy EZchip

Interconnect supplier Mellanox Technologies, Ltd. (NASDAQ: MLNX) says it has agreed to purchase network processor unit (NPU) pioneer EZchip (NASDAQ: EZCH; TASE: EZCH). Mellanox has offered $25.5 per share in cash for all of EZchip's common shares, creating a transaction value of approximately $811 million (approximately $620 million net of cash).

Interconnect supplier Mellanox Technologies, Ltd. (NASDAQ: MLNX) says it has agreed to purchase network processor unit (NPU) pioneer EZchip (NASDAQ: EZCH; TASE: EZCH). Mellanox has offered $25.5 per share in cash for all of EZchip's common shares, creating a transaction value of approximately $811 million (approximately $620 million net of cash).

Mellanox says it will fund the transaction with cash on hand from the combined companies and $300 million in fully committed debt financing. The boards of both companies have unanimously approved the deal, which Mellanox expects will close in the first quarter of 2016. Mellanox predicts the transaction will prove accretive to non-GAAP earnings per share beginning as soon as the purchase is complete.

EZchip was among the first, if not the first, company to deliver NPUs to the market. Its devices found homes in a variety of communications systems, including those of optical transport vendors to support switching requirements (see, for example, "Ciena taps EZchip's NPUs for Carrier Ethernet switching"). In addition to the NPUs, EZchip is expected to bring Mellanox expertise in security, deep packet inspection, video, and storage processing. Mellanox says it will retain both companies' existing product lines.

"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," said Eyal Waldman, president and CEO of Mellanox Technologies. "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 Layer 1-3 connectivity solutions for data centers 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 centers and carriers," added Eli Fruchter, CEO of EZchip.

For more information on communication ICs and suppliers, visit the Lightwave Buyer's Guide.

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