San Francisco. Nvidia Corp agreed to buy chipmaker Mellanox Technologies Ltd for $6.9 billion, gaining expertise to help it push into the growing market for data centre components.
The $125-a-share cash offer for Mellanox is a 14 per cent premium to Friday’s close of $109.38. But traders may not be sold on the idea that the deal will go through, with Mellanox trading up 8.6 per cent to $118.80, still short of the bid from Santa Clara, California-based Nvidia.
Nvidia’s biggest-ever acquisition is aimed at accelerating momentum for one of Chief Executive Officer Jensen Huang’s most successful initiatives. The company’s founder built a multi-billion-dollar business in under three years by persuading owners of data centers that his graphics chips are the right solution for processing the increasingly large amounts of information needed for artificial intelligence work, such as image recognition.” The data centre is more important than ever,” Huang said in an interview. “This combination allows us to innovate faster.”
Nvidia is said to have won a bidding process for the company, which makes chips used to speed the flow of information across computer servers, beating out rivals including Intel Corp Mellanox’s market value, now at about $5.9 billion, started to run up last year when activist investors took stakes and talk that it was up for sale emerged. Shares of the company have risen 66 per cent from their October trough and 18 per cent this year before the deal was announced. Nvidia shares were up 1.5 per cent on Monday in New York to $152.89.