After leading the opposition to the sale of EZchip Semiconductor Ltd. (Nasdaq: EZCH; TASE:EZCH) to Mellanox Technologies Ltd. (Nasdaq:MLNX), and after reversing itself and announcing its support for the deal, it turns out that Raging Capital has sold most of its holdings in EZchip in the past few days.
According to a report to the US Securities and Exchange Commission, Raging Capital currently holds only 2.5% of EZchip's shares, compared with 8% previously. The company sold its holdings at prices around $25.20 per EZchip share, while its main grounds for opposing the sale of EZchip to Mellanox was that the price offered, $25.50, undervalued EZchip.
Mellanox is acquiring EZchip for $811 million. It is now believed that the EZchip shareholders meeting scheduled for January 19 will approve the deal. The required majority is 75%.
The company's delayed the vote on the deal last November, after they realized that they would not obtain the required majority. Mellanox gave EZchip 30 more days to look for another buyer for the company. The period ended with no other offers having been received, even though EZchip contacted 31 potential buyers. Following this result, Raging Capital last week announced that it was withdrawing its opposition to the sale of EZchip to Mellanox, even though it believed that EZchip was worthy of a higher price.
"Under the current circumstances, we believe that the best possibility available to EZchip's shareholders is to accept Mellanox's offer," Raging Capital wrote.
Raging Capital became a shareholder in EZchip when it bought shares at $16.20 a share, and later bought additional shares at over $20 a share. In any case, it is making a handsome return on its investment in the company.
Founded and managed by CEO Eli Fruchter, EZchip develops and markets chips for communications networks routers. Mellanox, founded and managed by CEO Eyal Waldman, develops and markets equipment for high-speed data communications on organizational networks.
Published by Globes [online], Israel business news - www.globes-online.com - on January 10, 2016
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