An unexpected hitch is occurring in the Mellanox Technologies Ltd. (Nasdaq:MLNX)-EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH) deal. A few hours before the vote on the deal at EZchip's shareholders' meeting, Mellanox asked EZchip to take the matter off its agenda. Mellanox went on to say that it was still committed to acquiring EZchip at $25.50 a share - a total of $811 million.
Mellanox sent EZchip a letter with two changes in the merger agreement. The first is that Mellanox is granting EZchip 30 days to start negotiations with other parties likely to be interested in an acquisition (a go-shop period). If a better offer is obtained, Mellanox will be given an opportunity to match it.
In addition, Mellanox is waiving the compensation payment in the agreement in the event of the deal being called off. EZchip will schedule a new shareholders' meeting to vote on the revised deal.
The reason for the unexpected development is that the two companies believe that they would not obtain the 75% majority required to pass the deal at today's shareholder's meeting.
Mellanox CEO Eyal Waldman said that his company's offer was "full, fair and firm, and highly attractive for EZchip shareholders, compared to peers and precedent semiconductor transactions. This offer provides EZchip shareholders with the certainty of immediate cash value." He called on EZchip's shareholders to support the offer to purchase, as EZchip's board of directors had done.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2015
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