After USB AG decided to cut down the ratings of Mellanox Technologies Ltd. on plans to delist in Israel, the share of the same have experienced the biggest decline in the last 4 months. Mellanox which is known as data storage and transfer software developer saw its shares declining by 12%, marking the biggest tumble since 24th January. Each share is currently priced at 182.1 Shekels or $49.38. Incidentally, the New York traded shares of the company experienced a retreat of 7.3% on 31st May and those are at $51.87 per share now. The company has a weighting of 5% on the benchmark stock gauge TA-25 Index, however, the weighting has now trimmed by 0.8%.
The Chief Executive Officer and Chairman of Mellanox, Eyal Waldman, on 20th May, told a panel on market regulation, that he intends Mellanox to be traded in Israel, but, if it seems to be hurting them too much, he will consider the option of moving out of the country. Incidentally, results of the vote to decide whether Waldman will remain the Chief Executive Officer and Chairman of Mellanox for another 3 years or not will be announced right on this week. Incidentally, this result has been postponed twice before. UBS has cut down the rating of Mellanox shares to neutral from its earlier value of buy.
Since 20th May, the shares of the company in New York have tumbled by 10% as it decided to postpone the annual convention for the 2nd time. Many are already concerned that the company has still not been able to resolve the issue of splitting management roles. According to the Head of Research at Migdal Capital Markets, Adar Etzioni, if the company decides to go with the delisting plans, a large supply of shares from the local investors should be expected, particularly the ETFs as the company will be exiting the indices. Etzioni added that some of the local investors such as mutual funds are not allowed to be exposed to the companies which are traded overseas only.
According to Steven Milunovich, the analyst at UBS, the decision of possible delisting has surprised them and hence some price pressure is expected. Milunovich has lowered the 12-month price target of Mellanox by 16% to $57. Milunovich added that he is concerned that some 20%-25% shares are currently held in Israel and this may prompt selling.