New York based activist investor, Starboard Value announced that it had acquired a 10.7% interest in Mellanox Technologies and has urged the company to improve its profitability and explore a sale of the company. Could this be a potential sale to larger players?

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Mellanox Technologies, which develops interconnecting and switching products for storage and servers, rallied 10.7% off the back of this news.

This follows the announcement of Marvell Technology’s merger with Cavium in a deal valued at about US$6 billion. Starboard Value also owns a 6.8% interest in Marvell Technology, which is a chipmaker. The merger with Cavium, which makes network processors is an attempt to diversify its business away from chipmaking, which is a declining business.

Given Starboard Value’s track record with Marvell Technology, some analysts believe that Mellanox Technologies would be open to a potential sale citing Marvell Technology, Nvidia, Xilinx and Intel as potential acquirers. At a current market value of about US$2.9 billion, Mellanox Technologies would be a very digestible and likely accretive acquisition for these larger players.

One or more AtlasTrend managed funds own shares in Mellanox Technologies.

 
 

About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kevin has over 19 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.