The Ticker: Analysts Tag Israel's Mellanox as Broadcom Takeover Target

Delek Energy shares soar after parent offers to take company private ■ Elbit Systems slates internal changes ahead of IMI takeover ■ Strauss reports 34% jump in quarterly net profit ■ Biomed stocks take Tel Aviv Stock Exchange lower

Eyal Waldman, CEO of Mellanox Technologies (right) next to Eli Fruchter, CEO of EZChip.
Tomer Appelbaum

Analysts tag Israel’s Mellanox as Broadcom takeover target

Israel’s Mellanox could be Broadcom’s next takeover target after U.S. President Donald Trump blocked the Singapore-based microchip maker’s $117 billion bid for Qualcomm on national security grounds, analysts told Reuters on Tuesday. Most analysts said they now expected Broadcom to rescind its Qualcomm offer and turns its sights on either San Jose-based Xilinx or Mellanox. “We believe M&A prospects could start with Xilinx, which appears well aligned. Mellanox also seems possible, albeit relatively small,” said Craig Ellis of investment bank B. Riley. Xilinx, which has a market value of $20 billion, makes chips for wireless communication while Mellanox’s products connect servers and storage systems. It was a $4 billion market cap. Mellanox, which is fending off demands from activist investor Starboard for a corporate shakeup, was not immediately available for comment, Reuters said. Xilinx declined to comment. Mellanox shares were up 1.3% at $72.70 mid-afternoon local time in New York. (TheMarker Staff
 

Delek Energy shares soar after parent offers to take company private

Delek Energy shares soared on Wednesday after its parent company Delek Group said it planned to delist stock from the Tel Aviv Stock Exchange by buying back the 11.77% of the company it doesn’t already own. In an announcement made after the market closed on Tuesday, Delek Group said it was offering 385 million shekels ($112 million) in cash as well as shares in the parent company and another energy subsidiary, Delek Drilling. For each Delek Energy share worth 1.461 shekels as of Tuesday’s close, the holder would receive 636.40 shekels in cash, 45 certificates of participation in Delek Drilling and 0.85 of a share in Delek Group, the holding company controlled by Yitzhak Tshuva. The offer comes after several failed attempts to consolidate subsidiaries in order to make its corporate structure simpler before it seeks a U.S. listing. Shares of Delek Energy ended 12.9% higher at 1,634 shekels. Delek Group shares fell 0.8% to 611.20 shekels. (TheMarker Staff)

Elbit Systems slates internal changes ahead of IMI takeover

Elbit Systems, the defense electronics maker, is planning internal changes after the Israeli government agreed this week to sell it state-owned IMI Systems for 1.8 billion shekels ($310 million). In a letter to employees, Udi Vered, executive vice president for Elbit’s land and C4I (communications and information technology) division, said the division would be split into two to enable the land divisions to reach its full potential in terms of engineering and marketing. Vered will head up the land division, which will be combined with IMI, and whose product line had great potential for sales. Haim Delmar, another senior vice president, will head the now separate C4I operation. In a separate development, Elbit said on Wednesday that it was awarded a $65 million contract by an unnamed Asian-Pacific country to provide search and rescue systems over the next three years. Elbit shares finished down 0.5% at 474.90 shekels ($138.31). (Yoram Gabison)

Strauss reports 34% jump in quarterly net profit

Strauss Group reported on Wednesday a 34% rise in fourth-quarterly net profit, boosted by strong growth in Israel and in its international dips and spreads business. The maker of snacks, fresh food and coffee earned 77 million shekels ($22.4 million), up from 58 million shekels a year earlier. Revenue rose 6% to 2.2 billion shekels. Excluding foreign currency effects, organic sales grew 10.2%. Sales of coffee, where Strauss is a market leader for roast and ground coffee in central and Eastern Europe and Brazil, grew 2.3% to 1.1 billion shekels, or 6.5% excluding foreign currency effects. Sales of dips and spreads at its joint ventures with PepsiCo jumped 24% as the business recovered from a hummus recall in 2016 over listeria concerns. Gil Dattner, an analyst at Leumi Capital Markets, termed the report “somewhat disappointing” because of weak results in the coffee and dips segments. Strauss shares ended down 3.9% at 78.80 shekels. (Yoram Gabison)

Biomed stocks take Tel Aviv Stock Exchange lower

Tel Aviv shares ended broadly lower after losing altitude in the final two hours of trading on Wednesday as biomed stocks fell. The TA-35 and TA-125 indices both ended about 0.2% down at 1,499.11 and 1,359.06 points, respectively, on turnover of 1.09 billion shekels ($320 million). Teva Pharmaceuticals led biomeds lower, falling 3.3% to 64.49 shekels. Joining it was Opko Health on a 2.9% drop to 11.31 shekels and Mazor Robotics on a 2.8% decline to 122.80 shekels. Frutarom rose 1.8% to 323.60 shekels after it agreed to buy 70% of Argentina’s Meroar and Meroaromas for $11.2 million with an option to buy the rest later. SodaStream finished 2.65% higher at 309.50 shekels and Housing & Construction Limited extended its seven-session rally adding another 2.8% to close at 6.53 shekels. Bezeq gained 1% to 5.12 shekels. In forex trading, the dollar weakened 0.4% to a representative rate of 3.431 shekels. 
(Guy Erez)