Nvidia Corp announced its $6.8 billion acquisition of Israeli chip designer Mellanox Technologies Ltd, a move intended to strengthen its data center operations. The transaction values Mellanox at $125 per share, reflecting a 14% premium over its closing price on the day before the deal was disclosed.
Mellanox, headquartered in Israel and the United States, develops networking hardware and chips critical to cloud computing infrastructure. At the time of the announcement, the company had a market capitalization of approximately $5.9 billion, according to regulatory filings.
Mellanox shares surged 8.8% in premarket trading while Nvidia stock declined 1.3% during the same period. Analysts noted the acquisition would complement Nvidia's growing focus on networking solutions, with Bernstein's Stacy Rasgon highlighting Mellanox's expertise in this area.
The deal emerged from a competitive bidding process involving major chipmakers like Intel and Xilinx, according to sources. Intel has not commented on its involvement in the negotiations.
Activist investor Starboard Value LP, which held a 5.8% stake in Mellanox, benefited from the acquisition after securing board representation through a prior agreement. Data center revenue constitutes nearly a third of Nvidia's total sales, though the company has faced challenges from slowing demand in China and the cryptocurrency market.
A February 2015 photo of Nvidia's Santa Clara headquarters accompanied the report. Reporting by Supantha Mukherjee and Sayanti Chakraborty in Bengaluru; Tova Cohen in Tel Aviv; Editing by Arun Koyyur
