NVIDIA buys high-performance chip-maker Mellanox for $6.9 billion

Anna Jefferson
March 12, 2019

"The deal will strengthen NVDA's ability to offer datacenter-scale computing solutions optimized across computing, networking and storage, that can accelerate datacenter-scale workloads", Seyrafi said in a note distributed Monday. "Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine".

Intel has already offered to pay $6 billion for Mellanox, Calcalist said, estimating that any final acquisition deal would likely be some 10 percent higher than the Intel bid. Its network tech is thus installed in "over half of the world's fastest supercomputers and in many leading hyperscale datacenters", boasts new owner Nvidia.

Post close, the transaction - for which Goldman Sachs served as financial advisor to Nvidia - is expected to be immediately accretive to Nvidia's non-GAAP gross margin, non-GAAP earnings per share and free cash flow, according to Nvidia.

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In its press announcement, Nvidia said it will acquire all Mellanox stock for $125 per share. It was the company's most significant foray into the auto industry. 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.

FILE PHOTO - The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017.

Nvidia is set to make the biggest acquisition in its history.

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Mellanox's revenue surged 26 per cent previous year, topping US$1 billion for the first time.

The deal will help Nvidia to better compete in the data centre market, which now accounts for around a third of its sales. That process has become more complicated due to the USA trade stand-off with China.

Huang said Nvidia studied carefully how the deal would be reviewed by regulators and believed it wouldn't face significant hurdles because the two companies are complementary.

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Add it up and Nvidia with Mellanox can better optimize systems.

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