Nvidia reportedly to buy Mellanox

Nvidia reportedly to buy Mellanox


Chipmaker Nvidia Corp is approaching to conclude an all cash acquisition deal of worth more than $7 billion to buy peer Mellanox Technologies Ltd, Reuters reported on Sunday citing a source familiar with the deal.

If completed successfully, the acquisition deal would be biggest-ever from Nvidia and would not only be helpful to grow its chip making business for data centers but also lessen its reliance on the video game industry in which Nvidia is a well-known major technology vendor.

Intel Corp is also intending to acquire Mellanox and was in negotiations with the company, but Nvidia, with its higher bid has likely to be winning the deal, which is expected to be officially announced no before Monday, the person said.

Nvidia’s higher than Intel bid for Mellanox was also reported by financial news website Calcalist on Sunday.

Mellanox is an Israel and the United States based technology company which makes chips that establishes connectivity between high-speed networks and servers, and as of its share closing price on Friday, it has market capitalization of about $5.9 billion while that of Nvidia is about $91 billion.

Revenue from data center business makes a one third of total revenue of Nvidia and under the leadership of Jensen Huang as its chief executive officer; the Santa Clara, California-based company has been enjoying rapidly increasing growth pace in past five years, but in recent quarters, company sales remained hurting because of the vanishing cryptocurrency business and slowdown in Chinese markets.

Because of the lower-than-expected data center sales and weakening demand of its gaming chips in Chinese market, in January, Nvidia lowered its revenue estimates by $500 million for the fourth quarter.

Starboard Value LP is an activist hedge fund which is shareholder of Nvidia and last year it forced the company to restructure its board, and the current deal also highlights a win for the hedge fund.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.