EZchip Responds to Glass Lewis & Co Report Company Urges Shareholders to Vote "FOR" the Merger
(note- best to read EZCH's actual PR for correct indentation, etc.
Proposal that Provides EZchip Shareholders with Compelling and Immediate Value 
[iframe tabindex="-1" id="yom-ad-LREC-iframe" src="http://l.yimg.com/rq/darla/2-8-9/html/r-sf.html" frameborder="no" marginwidth="0" marginheight="0" scrolling="no" style="left: 0px; top: 0px; width: 300px; height: 250px; display: block; visibility: inherit; position: absolute; z-index: 10;" hidefocus="true" allowtransparency="true" async=""] [/iframe] YOKNEAM, Israel, November 4, 2015 /PRNewswire/ --
EZchip Semiconductor Ltd. ("EZchip" or the "Company") ( EZCH), a leader in high-performance processing solutions for carrier and data center networks, today issued the following statement in response to a report issued by Glass Lewis & Co. ("Glass Lewis") regarding the Merger Proposal with Mellanox Technologies, Ltd. ("Mellanox").
Although we disagree with its conclusion, we note that Glass Lewis recognizes[1]:
CERTAINTY OF VALUE IN A CONSOLIDATING INDUSTRY: "From the onset, we recognize that the Company operates as a relatively smaller player in a competitive, dynamic and consolidating industry, relying in large part on a few significant customers. In our view, these factors could reasonably lead the board to conclude that selling the Company, particularly at a certain and immediate all-cash price, may be the best way to maximize shareholder value, compared to the primary alternative of continuing to operate on a standalone basis.
" FAIR VALUE: "The purchase price for EZchip also looks particularly favorable when compared to prior transactions on the basis of trailing multiples.
"RAGING'S INTERESTS ARE DIFFERENT FROM OTHER SHAREHOLDERS: "It should be highlighted that Raging Capital has purchased put options which protect it from a drop in EZchip's share price below $25. We recognize that the vast majority of other EZchip shareholders probably don't have similar protection and likely remain exposed to such a price decline."
Still, we strongly believe that Glass Lewis reached the wrong conclusion in failing to recommend that EZchip shareholders vote FOR the proposed transaction with Mellanox. The EZchip Board carefully, in full exercise of its fiduciary duty to all shareholders, managed the sale process to obtain the highest price available and has not been approached by any other potential buyer since the public announcement of the merger agreement on September 30, 2015. In fact, in its report, Glass Lewis recommended that EZchip shareholders vote FOR ALL EZCHIP DIRECTOR NOMINEES AND AGAINST RAGING CAPITAL'S NOMINEES, stating:
...+ "We do not believe there are substantial issues for shareholder concern as to any of the nominees. Accordingly, we recommend that shareholders vote FOR all incumbent nominees."
...+ "In our view, Mr. McWilliams' lack of public company board experience and Mr. Traub's nomination by Raging Capital in multiple other activism campaigns raises reasonable doubt as to whether these individuals are more qualified or better suited to serve as EZchip directors other than any of the Company's current directors." EZchip's Board has been intently focused on maximizing shareholder value and remains confident that the offer from Mellanox represents an attractive valuation for EZchip.
INDEPENDENT ADVISORY FIRMS AGREE WITH EZCHIP
The Company notes that Institutional Shareholder Services ("ISS"), a leading proxy advisory firm in the U.S., and Entropy Financial Research Services Ltd. ("Entropy"), a leading independent provider of proxy advisory services in Israel, have recommended that EZchip shareholders vote FOR the Merger Proposal with Mellanox Technologies, Ltd. ("Mellanox").[2]
As previously announced in its October 29, 2015 report, ISS stated:
...+"A vote FOR this proposal is warranted given: ..
....+The reasonable valuation multiples; ..
...+The downside potential in an adverse scenario for sales of NPS-400." ".
...+The offer price of USD 25.50 in cash provides reasonable compensation for giving up the potential upside in a successful turnaround."
...+"Raging Capital highlights the significant upside for shareholders with good execution, though there might also be significant downside from the offer of USD 25.50 if EZchip does not succeed in replacing lost revenues fast enough."
As previously announced in its November 02, 2015 report, Entropy stated:
...+ In conclusion, as we examine this transaction, we believe that the alignment of interests of the CEO of the Company, who is also its largest individual shareholder, the fact that the transaction was done at a price higher than the market price at the time of its announcement and the lack of any higher proposal thus far from any competitor, indicate that the price offered by Mellanox is beneficial to all of EZchip's shareholders."
The Company also noted that like Glass Lewis, ISS and Entropy recommended that EZchip shareholders vote FOR ALL of the Company's experienced director nominees and AGAINST Raging Capital's two director nominees at the Company's upcoming Annual General Meeting of Shareholders.
YOUR VOTE IS IMPORTANT - PLEASE VOTE FOR THE MELLANOX TRANSACTION TODAY
Your vote is extremely important, no matter how many or how few shares you own. If you have NOT already voted, please IMMEDIATELY vote FOR the Merger Proposal and FOR ALL of EZchip's experienced director nominees and AGAINST Raging Capital's two director nominees to ensure that your vote will be received in time.Please do not return or otherwise vote any GOLD proxy card sent to you by Raging Capital. Even if you have previously voted against the merger or for Raging Capital's nominees, you have every right to change your vote. Only your latest dated, validly executed vote will count.
If you have any questions about the Annual General Meeting or need assistance in voting your shares, please contact the Company's proxy solicitor, MacKenzie Partners, at Toll-free: (800) 322-2885 or Collect: +1-(212)929-5500.
http://finance.yahoo.com/news/ezchip-responds-glass-lewis-co-143800513.html
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