Raging Capital Urges Shareholders Not to Allow Mellanox to Capture All the Upside of EZchip in Proposed Merger

Issues Open Letter to Shareholders Noting Additional Major Data Center Wins That EZchip May Be Downplaying in Order to Push Through Merger Vote

ROCKY HILL, New Jersey, Nov. 6, 2015 /PRNewswire/ -- Raging Capital Management, LLC ("Raging Capital"), one of the largest shareholders of EZchip Semiconductor Ltd. (NASDAQ: EZCH) ("EZchip") owning approximately 6.7% of the ordinary shares outstanding, issued a letter to EZchip shareholders today highlighting a key disclosure that EZchip may be downplaying in its effort to obtain shareholder approval of the $25.50 per share buyout offer from Mellanox Technologies, Ltd. (NASDAQ: MLNX).

The full text of the letter follows:

November 6, 2015

Dear Fellow Shareholders:

Raging Capital Management, LLC continues to urge shareholders of EZchip Semiconductor Ltd. ("EZchip" or the "Company") not to be fooled by EZchip's assertions that the proposed merger with Mellanox Technologies, Ltd. ("Mellanox") provides "compelling" value to shareholders. As we have conveyed to you in prior letters, EZchip is a great company with significant growth potential and Mellanox is poised to reap the significant upside of EZchip if the merger is approved. This is why we believe EZchip is downplaying a key development regarding recent data center design wins that was buried in a press release issued yesterday outlining the purported benefits of the merger.

In the press release, EZchip revealed:

"With its NPS product line, EZchip has won three tier-1 data center customers . . . "

This is BIG NEWS, and it is a new and material disclosure that is worth highlighting. Previously, EZchip had disclosed that it secured NPS design win(s) with a single "hyper-scale data center." This latest disclosure implies that EZchip has secured two additional major data center wins, indicating that customer adoption of the NPS is accelerating.

The short list of "tier-one" data center operators would include Amazon, Google, Microsoft, Facebook, HP, IBM and Rackspace. Based on EZchip's disclosure, we believe the Company may have secured wins with three of these names. These wins are in addition to new design wins with a "tier-one carrier," a pair of "tier-one switch vendors," and longtime NP customer ZTE. EZchip has also announced that it has secured wins with a number of tier-two and smaller customers.

This is a great starting roster for NPS and the significance of this development would ordinarily justify the issuance by EZchip of a standalone press release just to brag about this news. Instead, in the face of a proxy contest threatening to derail the proposed merger, EZchip soft-pedaled the news by saying ". . . it is not clear what revenue these design wins will translate to or when." EZchip did not even mention this development in its third quarter earnings release. Do not be misled by EZchip – with this development, shareholders could leave even greater value on the table if the merger is approved!

In our view, EZchip is in the right place at the right time with leading edge technology. Cloud computing is exploding and we are only in the early innings of the break-out of white box networking, network function virtualization and software-defined networking. The NPS-400 is a unique and powerful Layers 2-7 chip targeting these opportunities. In essence, EZchip is positioned to "hollow out" the router in a revolutionary way that competitors cannot match. These design wins confirm this reality.

Now is not the time to sell EZchip. We believe the risk/reward is stacked heavily in favor of shareholders, and we are excited about EZchip's future potential. We encourage fellow shareholders to vote against the EZchip-Mellanox merger.

The Annual General Meeting of Shareholders of EZchip, scheduled to be held on November 12, 2015, is fast approaching. Raging Capital is urging all shareholders to vote to reject the merger and to elect its two highly-qualified director nominees – Paul K. McWilliams and Kenneth H. Traub – in an effort to prevent a value-destructive transaction and to help protect the interests of shareholders.

Instructions on how shareholders can vote AGAINST the merger and vote FOR Raging Capital's two highly-qualified director nominees can be found at www.EZCH-value.com.

Please sign, date and return the GOLD proxy card today.

Sincerely,

William C. Martin
Chairman and Chief Investment Officer
Raging Capital Management, LLC

IMPORTANT

Tell your Board what you think! Your vote is important. No matter how many Ordinary Shares you own, please give Raging Capital your proxy AGAINST the Merger and FOR the election of its two highly-qualified nominees by taking three steps:

• SIGNING the enclosed GOLD proxy card,
• DATING the enclosed GOLD proxy card, and
• MAILING the enclosed GOLD proxy card TODAY in the envelope provided (no postage is required if mailed in the United States).

If any of your Ordinary Shares are held in the name of a brokerage firm, bank, bank nominee or other institution, only it can vote such shares and only upon receipt of your specific instructions. Depending upon your broker or custodian, you may be able to vote either by toll-free telephone or by the Internet. Please refer to the enclosed proxy card for instructions on how to vote electronically. You may also vote by signing, dating and returning the enclosed GOLD proxy card.

If you have any questions or require any additional information concerning Raging Capital's solicitation, please contact Okapi Partners at the address set forth below.

Media Contact:

Hedge Fund Solutions, LLC
Damien Park, 215-325-0514

Investor Contact:

Okapi Partners LLC
Bruce Goldfarb, 212-297-0722, Chuck Garske, 212-297-0724 or Lydia Mulyk, 212-297-0725

Related Links

http://www.ezch-value.com