Nvidia set to acquire Mellanox Technologies for $6.9 billion

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USA chip supplier Nvidia Corp has agreed to buy Israeli chip designer Mellanox Technologies Ltd for $6.8 billion, beating rival Intel Corp in a deal that would help the firm boost its data centre and artificial intelligence business. The bid, rumored for several days, trumped a $6 billion offer made by Intel several months ago.

Mellanox, which makes chips and other hardware for data center servers that power cloud computing, said it does not comment on rumors or speculation.

The acquisition is a win for the New York-based activist investor Starboard Value LP, which owns a 5.8 percent stake and had reached a deal with Mellanox previous year over the composition of its board.

Shares of Mellanox rose 8.8 percent and Nvidia shares fell 1.3 percent in premarket trading. 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. The offer, said to have beaten out one from rival Intel, is the largest in Nvidia's history and will pay Mellanox shareholders $125 a share - a 14.3% premium to Friday's closing price.

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'We're excited to unite Nvidia's accelerated computing platform with Mellanox's world-renowned accelerated networking platform under one roof to create next-generation data centre-scale computing solutions. "I am particularly thrilled to work closely with the visionary leaders of Mellanox and their wonderful people to invent the computers of tomorrow". Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures. Microsoft and Xilinx, a US-based supplier of programmable logic devices, were also allegedly eying up the company.

"This combination will foster the creation of powerful technology and fantastic opportunities for our people". The company said it intends to fund the acquisition through cash on its balance sheet.

The deal is expected to close by the end of 2019.

Nvidia will conduct a webcast at 5:30 a.m. PT today to discuss the transaction.