Infiniband developer Mellanox Technologies Ltd. (Nasdaq:MLNX) is in advanced talks to buy chipmaker EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH), according to sources close to the negotiations. Those sources say that a deal could be concluded soon at a price a little above EZchip's market cap of $660 million. Both companies are based in Yokne'am near Haifa in Israel.
Following media reports of the talks, trading in EZchip shares was halted this morning on the Tel Aviv Stock Exchange (TASE). EZchip will reportedly make a major announcement later today.
EZchip manufactures chips for routers on large communications networks and for communications equipment manufacturers. The company has undergone a major shakeup this year after announcing in May that its largest customer, communications giant Cisco Systems would not be using the new generation of EZchip processors but rather developing its own. In the first quarter of 2015, Cisco was responsible for 35% of EZchip's revenue - about $9.5 million, so that Cisco's decision will have a major impact on future revenue.
Mellanox develops and provides big data interconnect solutions including chips, cards, communications switches and cables for transferring information swiftly in organizations. The company's second quarter revenue was $163 million, up 59% from the corresponding quarter of 2014, and up 11.2% from the preceding quarter of 2015. Mellanox reported GAAP net profit of $19.2 million compared with a net loss of $8.9 million in the corresponding quarter of 2014.
Both companies declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on September 30, 2015
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