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In a bid to strengthen its position in the data center space, Mellanox Technologies, Ltd., a supplier of end-to-end connectivity solutions for servers and storage systems, finalized a deal to buy Voltaire, Ltd., a provider of scale-out computing fabrics for data centers, high performance computing and cloud environments.

Mellanox (News - Alert) announced reaching of a definitive agreement with Voltaire on Dec. 1, Monday. Under the agreement, Mellanox will acquire the 100 percent share capital of Voltaire (News - Alert), for approximately $218 million in cash. According to the agreement, Voltaire shareholders will receive $8.75 for each ordinary share of Voltaire.

Both the companies are based in Israel and both are key players in the infiniband rapid connectivity sector between servers and organizations with a speed of up to 80Gb. Post acquisition, Mellanox will be running the combined business from both companies' current offices located in Israel, the U.S. and around the world. Two businesses jointly have approximately 700 employees and revenues of $217 million for the 12 months ended September 30, 2010.

The officials at the company said that the terms of the transaction have been unanimously approved by both the Mellanox and Voltaire Boards of Directors. The transaction is expected to close in the first quarter of 2011.

Latham & Watkins LLP is acting as legal advisor and J.P. Morgan is acting as financial advisor to Mellanox. Bank of America Corporation is acting as financial and Morrison & Foerster is acting as legal advisor to Voltaire on the transaction.

In a press release, Mellanox expressed its hope that the acquisition will make a value addition to its fiscal 2011 non-GAAP earnings by USD0.02 to USD0.05 or more per share.

The merger with Voltaire, according to Mellanox, will also help the company achieve meaningful revenues and cost synergies over time, with estimated, annualized cost synergies of at least USD10m by the end of 2012.

Mellanox intends to retain both companies' existing product lines. The companies plan to converge such lines in future product generations to ensure continuity for customers and partners of both companies. As such, Mellanox hopes that the acquisition will rightly complement its products, markets, customers and strategies and help enhance its market position as a leading provider of end-to-end connectivity solutions for servers and storage systems.

Recently, Mellanox Technologies appointed Dov Baharav to the Board of Directors. Baharav was president and CEO of Amdocs (News - Alert) Management Limited.