Nvidia Outbids Intel to Acquire Israeli Chipmaker Mellanox for $6.9 Billion

Nvidia offers bid for Israeli chip firm Mellanox: report

Mellanox's networking technology is used within data centres, the remote stacks of powerful computers used by companies to store and process vast amounts of information. Nvidia's acquisition of Mellanox would also represent a win for activist hedge fund Starboard Value LP, which is a shareholder of the company and reached a deal with it previous year over the composition of its board.

Mellanox, which makes chips and other hardware for data center servers that power cloud computing, said it does not comment on rumors or speculation.

In the press-statement about the acquisition Nvidia's Jensen Huang talked about how excited he was to be able to combine Nvidia's and Mellanox's talents and technologies to create holistic compute/networking architectures "to form a giant datacenter-scale compute engine". To deal with this, data centers in future will be built as though they are single giant computers "with tens of thousands of compute nodes", requiring inter-connections that let them work in parallel. "I am particularly thrilled to work closely with the visionary leaders of Mellanox and their awesome people to invent the computers of tomorrow".

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Eyal Waldman, co-founder and CEO of Mellanox, told a news conference in Tel Aviv he believes the tie-up can "build the future architecture of the future computing rooms". Net Net: "while the transaction would be a positive, given the size of the company, we wouldn't view it as a transformation", RBC Capital Markets analyst Mitch Steves wrote in a note to clients. "To maximize that opportunity, it's important that the company avoid integrating too tightly around their own solutions". Nvidia and Mellanox aren't strangers; they have previously worked together on several products including the likes of the Nvidia DGX-2, as well as the #1 and #2 USA supercomputers - Summit and Sierra. The company said it intends to fund the acquisition through cash on its balance sheet.

The deal is expected to close by the end of 2019. Mellanox shares rose 8.2 percent to $118.35 and Nvidia shares gained 7 percent to $161.23 on Monday.

Nvidia will conduct a webcast at 5:30 a.m. PT today to discuss the transaction.

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