A chart showing Mellanox's annual revenue from 2005 to 2009
(WEB HOST INDUSTRY REVIEW) — Data center equipment firm Mellanox Technologies (www.mellanox.com) announced on Monday it will acquire fellow networking technology provider Voltaire (www.voltaire.com) for about $218 million.
Mellanox will eventually end up paying $176 million after taking into account the cash on Voltaire’s books.
The terms of the transaction have been unanimously approved by the boards of both companies.
Expected to close in the first quarter of 2011, the acquisition will strengthen Mellanox’s position as an end-to-end connectivity solutions provider for the growing worldwide data center server and storage markets.
The combined businesses currently have about 700 employees and achieved revenues of $217 million for the twelve months ended September 30.
The acquisition will help Mellanox achieve revenue and cost synergies over time, with estimated, annualized cost synergies of at least $10 million by the end of 2012.
Mellanox’s board says it intends on nominating Voltaire chairman and CEO Ronnie Kenneth to join its board at its annual general meeting of shareholders, which will likely be held in May 2011.
Kenneth has already said he intends on accepting this invitation to join the board.
Mellanox will combine employees from both organizations under one unified management team, and expects to run the combined business from both companies’ current offices located in Israel, the United States and around the world.
The company also intends to keep both companies’ existing product lines and will converge such lines in future product generations for the sake of continuity.
Mellanox says it expects the acquisition will allow it to operate as a “larger, more successful and more profitable enterprise” that will boost the value for the combined company’s shareholders and customers.
“The combination of Mellanox and Voltaire will create a leading provider of connectivity solutions for our customers by leveraging the complementary strengths of our companies,” says Eyal Waldman, president, chairman and CEO of Mellanox Technologies. “Together, we believe the combined company will be a stronger business partner and system solutions provider, delivering customers a comprehensive range of end-to-end connectivity solutions. We welcome the great talent from Voltaire and look forward to completing the integration of our employees to create a superior combined company.”
Under the agreement terms, Voltaire shareholders will receive $8.75 for each ordinary share of Voltaire that they hold at the closing of the transaction.
J.P. Morgan acted as exclusive financial adviser to Mellanox, while Bank of America Merrill Lynch acted as exclusive financial adviser to Voltaire.
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