Mellanox acquires 100G data center link specialist IPtronics for $45M

Acquired high-speed transceiver technology enables end-to-end 100Gb/s optical interconnects.

Mellanox Technologies (NASDAQ: MLNX), a supplier of end-to-end server and storage interconnect systems for data centers, announced its intent to acquire privately held IPtronics A/S, a specialist in optical interconnect component design for digital communications. The two companies have signed a definitive agreement under which Mellanox will acquire IPtronics at a total cash purchase price of approximately $47.5 million, subject to certain adjustments. The terms of the transaction have been unanimously approved by both the Mellanox and IPtronics boards of directors.

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Mellanox says the IPtronics acquisition enhances its ability to deliver end-to-end optical interconnect solutions at 100Gb/s and beyond. With IPtronics' high-speed transmitter and receiver devices, Mellanox says it can offer the complete technology portfolio required to provide high-speed networks and deliver next-generation optical connectivity, allowing data center customers to meet the growing demands of applications used in high-performance, Web 2.0, cloud, data center, database, financial services and storage environments.

"The proposed acquisition of IPtronics is highly complementary with our recently proposed acquisition of Kotura. IPtronics' parallel optical interconnect ICs further solidify our strategy to have a full end-to-end solution for the server and storage interconnect," comments Eyal Waldman, president and CEO of Mellanox.

IPtronics says it offers multichannel vertical cavity surface-emitting Laser (VCSEL) drivers, modulator drivers (MD) and transimpedance amplifiers (TIA) with significantly lower power consumption, richer feature sets and lower costs compared to existing solutions in the marketplace today. The technology Mellanox will acquire in connection with the transaction bridges the gap between optical and electrical interfaces and enables system providers to overcome the physical constraints of using copper-based connections in high-speed interfaces and backplanes.

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Mellanox expects to establish its first R&D center in Europe at IPtronics' current location in Roskilde, Denmark, and further expand its customer support presence within Europe. Further, Mellanox currently intends to retain IPtronics' existing product lines to ensure continuity for customers and partners.

Mellanox CEO Waldman continues, "The new and emerging Web 2.0 and cloud applications that influence our day to day living depend on fast manipulation of data, which is growing exponentially. Mellanox's interconnect provides the fastest and most scalable solution for moving data between server-to-server and server-to-storage, allowing the continuous development, use and expansion of these applications. We expect that the acquisition of IPtronics' technology and their development team will better position us to continue to offer faster interconnect solutions at 100Gb/s and beyond, with higher-density and lower power at a lower cost. We welcome the talented team from IPtronics and look forward to their contribution to Mellanox's continued growth."

The transaction is currently projected to close in the second half of 2013, subject to the completion of certain closing conditions. Mellanox currently expects the transaction to be accretive to its full fiscal year 2014 earnings by approximately $0.01 to $0.03 per share on a non-GAAP basis. IPtronics products are embedded in Mellanox's current solutions.

"This acquisition is important for both companies because it enables interconnect innovation for data centers that look for solutions that move data faster and more efficiently," concludes Niels Finseth, co-founder and CEO, of IPtronics A/S. "We are delighted to join the Mellanox team and look forward to working together to drive the combined company's further growth." The proposed acquisition is subject to customary closing conditions, including the receipt of applicable regulatory approvals.

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