Nvidia outbids Microsoft, Intel to acquire chipmaker Mellanox for $6.9 billion

Nvidia outbids Microsoft, Intel to acquire chipmaker Mellanox for $6.9 billion

Nvidia outbids Microsoft, Intel to acquire chipmaker Mellanox for $6.9 billion

Both Bloomberg and Reuters write that Nvidia will hand over the huge sum-the most it's ever paid for a purchase-later today. With a price tag of $6.9 billion, NVIDIA's acquisition will be vaulting the company deep into the datacenter networking market, making them one of the leading vendors virtually overnight. Mellanox specializes in datacenter connectivity, paratactically high-bandwidth Ethernet and InfiniBand products, for use in high-performance systems.

Nvidia Corp has submitted an offer to buy Israeli chip designer Mellanox, the Calcalist financial news website said on Sunday. As Nvidia's press release puts it, acquiring Mellanox will allow Nvidia to optimise datacentre-scale workloads and achieve higher performance at a lower operating cost. Microsoft and Xilinx, a US-based supplier of programmable logic devices, were also allegedly eying up the company. This, the source further details, represents a premium above an earlier bid placed by Intel, and a significant premium over Mellanox' current market cap. Mellanox will pay a $350 million termination fee to Nvidia if it accepts a rival offer.

The deal will help Nvidia to better compete in the data centre market, which now accounts for around a third of its sales. The combined company will power more than half of the world's 500 largest computers, the company said.

"The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world's data centres", said Jensen Huang, founder and CEO of Nvidia. 'Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant data centre-scale compute engine.

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. Waldman added that the combination of Nvidia and Mellanox was "a natural extension of our longstanding partnership".

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