Business in Brief: Hedge Fund Ends Opposition to Mellanox-EZchip Merger

Leviathan natural gas field partners begin sales talk with local customers and fiber-optic network company IBC to raise NIS 800 million.

Hagay Frid

Hedge fund ends opposition to Mellanox-EZchip merger

Raging Capital said Thursday it was ending its opposition to Mellanox’s planned acquisition of EZchip after concluding no better offers would be forthcoming. The U.S. hedge fund forced the two Israeli chip makers to delay a shareholders’ vote on the $811 million deal last month and explore other possible offers. With an 8% stake that makes it EZchip’s biggest shareholder, Raging said Mellanox’s $25.50 a-share offer undervalued the company. EZchip said it approached 31 companies over the following 30 days, but no serious counteroffers emerged. “We believe EZchip is worth more than $25.50 per share but no superior offer emerged from that process,” Raging conceded in a statement. “Consequently, under the current circumstances, we believe the best available option for EZchip’s shareholders is to accept the transaction with Mellanox.” A new shareholders’ meeting vote on the sale is now scheduled for January 19. EZchip shares closed up 2% at 98.75 shekels ($25.08) in Tel Aviv. Mellanox was up 1.4% to $40.40 in early trading in New York. (Omri Zerachovitz)

Leviathan partners begin sales talk with local customers

Delek Drilling and Avner, two of the partners in Israel’s offshore Leviathan natural gas field, said Thursday they were in talks to supply gas to private electricity producers and industrial companies, but did not offer further details. The news came a month after Prime Minister Benjamin Netanyahu signed off on the last element of the gas framework, clearing the way for the development of the large offshore field. Leviathan, with estimated reserves of 622 billion cubic meters, will cost at least $6 billion to develop. It is slated to begin production in 2018-2020 – although that timetable looks ambitious – and supply billions of dollars’ worth of gas to Egypt and Jordan, and possibly Turkey and Europe. Development of Leviathan is being led by Texas-based Noble Energy and Delek through its units Delek Drilling and Avner Oil and Gas. Shares of Delek ended down 1.4% at 11.51 shekels ($2.93), while Avner finished 1.7% lower at 2.21 shekels. (TheMarker)

Fiber-optic network company IBC to raise 800 million shekels

IBC, which is behind schedule in its plans to build a nationwide fiber-optic network to bring super-fast Internet to homes and offices, plans to raise 800 million shekels ($203.2 million) to get development back on track. Minority shareholders in the closely held company have objected to the plan, but IBC’s two controlling shareholders – state-owned Israel Electric Corporation and Sweden’s ViaEuropa – control the board, which is expected to approve the program. IBC plans to raise some of the money from existing shareholders, but also plans to bring in another major shareholder with expertise in fiber-optics and telecommunications via the fundraising. The company, meanwhile, has begun talks with cellular companies Partner Communications and Cellcom Israel about collaboration. Regulators would bar them from holding stakes in IBC, but the company would like them to offer services over its network, which the two have so far declined to do. (Amitai Ziv)