Mellanox creates a “Voting-Pill” against Takeover

8 March, 2018

To block the attempts of Starboard Value to take over its Board, Mellanox is trying to change the voting scheme and to adopt a new process called Plurality Voting

Mellanox HQ

Mellanox is planning to change its voting procedures to the board of directors, in order to block Starboard Value assault on its independence.  Starboard Value LP from New York is  the largest shareholder of Mellanox Technologies, with an ownership interest of approximately 10.7% of the Company’s outstanding shares, following a series of acquisition ended in November 2017. Soon after Starboard raised questions regarding Mellanox’ strategy, and on January 17, 2018, it sent a letter to all shareholders, claiming that “substantial change is required” in the board of directors, “in order to provide a new plan for the future.”

Starboard wants to take control over the board and is asking the shareholders to replace the current members with its nominees, among them Peter Feld, Managing Member and Head of Research of Starboard Value. Yesterday, Mellanox found an answer to this challenge: the company announced that it intends to hold an extraordinary general meeting of shareholders (EGM) in May 2018, at which shareholders will vote on a new voting scheme, called Plurality Voting.

Mellanox choose Steve Sanghi from Microchip

It means that in the event of contested elections, there will be a majority voting provision for the election of directors. “A plurality voting standard in a contested election of directors will ensure that if the number of director nominees proposed by the Mellanox Board of Directors and shareholders of Mellanox exceeds the total number of directors to be elected, those director nominees receiving the largest number of votes would be elected to the Board. A plurality voting standard maximizes the ability of shareholders to elect the directors they want.”

The company said that after this special meeting, it will set the date for the Annual General Meeting of shareholders, probably  on July 25, 2018. This will be the crucial date when Starboard’s nominees will contest the current board. Earlier this year Mellanox has made another important move:  On February 21, 2018 it increased its Board from 9 to 11 members, and appointed Steve Sanghi, Chief Executive Officer of Microchip Technology, and Umesh Padval, Partner at Thomvest Ventures as the new members of the company’s Board of Directors

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