Mellanox Technologies Ltd.'s (Nasdaq:MLNX) acquisition of EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH) is taking place at a handsome premium that will give EZchip's shareholders a good profit, at a time when the stock market is on a downtrend. The big loser from the transaction, on the other hand, is clear - the Tel Aviv Stock Exchange (TASE), which is losing another of its listed companies. EZchip is a significant company for the TASE; its share is included in the Tel Aviv 75, Tel Aviv 100, and BlueTech indices, which makes its delisting a painful blow.
The TASE has been faced with a difficult drought for a number of years. The number of companies listed on it has been falling from year to year. There were 473 companies listed on the TASE at the end of 2014, compared with 613 in 2010. While the number of IPOs has been negligible, more than a few companies have been delisted, whether through acquisition by other companies, an offer to purchase, a flattening of the control pyramid structure, or failing the meet the TASE rules for listing.
A relatively easily way of being delisted is available to dual-listed companies. In contrast to other companies, which must make an offer to purchase, a dual-listed company need only announce its intention, and after 90 days, its share is delisted, and it is traded exclusively on the foreign stock exchange. Companies like Radware, Pointer Telocation Systems, Top Image Systems, and other were delisted in this manner.
The most famous case, which aroused a great deal of emotion, took place in the summer of 2013. Mellanox, which at the time had one of the highest trading turnovers on the TASE, had itself delisted because of complaints about harsher regulation. The reason was the company's intention to extend Eyal Waldman's dual position as chairman and CEO, which required the approval of the minority shareholders.
Also at that time, TASE-listed companies were required to approve their remuneration policy, also including approval from the minority shareholders. Waldman was unstinting in his criticism of Israeli regulation. Who could have imagined that two years later, Mellanox would cause the delisting of another TASE company.
Published by Globes [online], Israel business news - www.globes-online.com - on September 30, 2015
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