Activist hedge fund Starboard Value LP to nominate 9 members to Mellanox’s board

While Mellanox clocked 19% to 30% in revenues in 2014 to 2016, its current revenue target is 0.5%.

Starboard Value LP, an ativist hedge fund has begun a proxy fight for control of Mellanox Technologies Ltd, an Israeli chipmaker, which it said is deeply undervalued.

Starboard, holding a 10.7% stake – the largest shareholder of Mellanox, stated it would nominate nine candidates for election, which includes Starboard’s head Jeffrey Smith, to the company’s board.

Smith has become the face and name behind the fund’s multiple proxy contests.

“We are appreciative of the constructive dialogue we have had with various members of management and the Board over the last few months … However, we do believe substantial change is needed after years of poor performance,” said Starboard in a letter to Mellanox shareholders.

Confirming of having received the nominations, Mellanox added that its board had held several rounds of discussions with the hedge fund in recent months.

On Thursday, Mellanox said Starboard did not discuss with Mellanox about the nominations before making them public despite recent ongoing talks.

For 2018, Mellanox had forecast a low- to mid-teens revenue growth which when compared with an estimated 0.5% rise is a far cry from the 19% to 30% growth rates it clocked between 2014 and 2016.

Starboard has come down strongly on Mellanox’s 2018 targets saying they were well below target ranges.

On Wednesday, the New York-based hedge fund had said that significant changes are “required and warranted” on Mellanox’s board in order to provide the firm with a firm footing for the future.

Ever since Starboard disclosed its stake in Mellanox in November, the firm’s shares have shot up by nearly 14%.

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