On Monday, U.S. semiconductor giant Nvidia said that it will buy Israeli multinational company Mellanox Technologies for $6.8 billion in cash.
Mellanox is a supplier of networking products for computer servers, and is a cloud-computing chip specialist whose market capitalization stood at $5.9 billion as of Friday’s close. Nvidia’s offer price of $125 per share to acquire Mellanox is a 14% premium over the latter's latest closing price.
On Sunday, Reuters mentioned that Nvidia outbid other chip companies such as Intel and Xilinx in pursuing the acquisition, citing anonymous sources familiar with the matter.
If it comes through regulatory review, the deal could be a big opportunity of business acceleration for Nvidia, as its datacenter chip segment – combined with Mellanox's systems networking expertise - could potentially milk the burgeoning market of data science and AI (and the resulting proliferation of data usage & storage demand).
Nvidia's revenue from its data center unit surged to $2.9 billion last year, compared to $830 million two years earlier. Mellanox’s revenue climbed +26 percent in 2018, exceeding $1 billion for the first time. The deal would be Nvidia’s biggest-ever acquisition.