Nasdaq-listed Israeli chipmaker Mellanox Technologies Ltd. is set to reach an agreement over board seat composition with activist investor Starboard Value LP, Reuters reported on Monday, citing people familiar with the matter.
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According to Reuters, the settlement with Starboard would involve naming two Starboard directors to Mellanox’s board. Mellanox’s chairman Irwin Federman is set to keep his seat, and Peter Feld, a Starboard portfolio manager whom the hedge fund wanted to add to the board would be left out, Reuters said. Mellanox could announce an agreement with Starboard as early as this week.
Founded in 1999 and headquartered in northern Israel, Mellanox develops and manufactures chips for communication networks in data centers. The company employs 2,700 people, 1,800 of which in Israel.
In November 2017, New York-headquartered Starboard became Mellanox’s largest shareholder when it acquired a 10.6% stake in the company. Starboard had been criticizing Mellanox's management and board since, advocating extensive reforms. Mellanox had been pushing back against Starboard's demands. In January, Starboard announced its intention to replace all nine members of Mellanox's board with its own candidates.
If the deal fails, Mellanox shareholders would be called upon to vote on whether or not to approve the changes proposed by Starboard, including the replacement of Mellanox’s entire board, at the company’s annual shareholders meeting on July 25.
In April, Mellanox published its first-quarter results, reporting $251 million in quarterly revenue, a 33% rise compared to the same quarter last year, and a GAAP net income of $37.8 million, compared to a net loss of $12.2 million in the same period in 2017.