Nvidia is close to finalizing a deal to acquire networking IC vendor Mellanox Technologies for more than $7 billion in cash, according to a report by the Reuters news service.
The report — which cites an anonymous source — said that Nvidia has outbid rival Intel for Mellanox. Nvidia could announce the deal early this week, according to the report.
A spokesman for Nvidia declined to comment on the report, citing company policy against commenting on rumors or speculation. Mellanox did not immediately respond to a request for comment by EE Times.
A deal to acquire Mellanox would instantly boost Nvidia’s data center business. It would also provide a big boost for the company’s efforts to further diversify sales beyond the PC gaming business, which has historically been the dominant source of Nvidia’s revenue.
Nvidia has made significant progress over the past year to increase its revenue diversity. In its mostly recently concluded quarter, Nvidia derived 43% of its $2.2 billion in sales from gaming, compared to 31% for data center. One year earlier, gaming made up 54% of the company’s $3.2 billion in sales for the quarter, compared to just 19% for gaming.
Late last year, Mellanox reportedly hired a financial advisor to help it explore options for selling the company. In late 2017, amid the semiconductor industry’s unprecedented merger and acquisition boom, Mellanox took heat from institutional investors including Starboard Value LP — one of Mellanox’s largest investors — for snubbing an acquisition overture by Marvell Technology.
A $7 billion bid for Mellanox would represent a premium of about 19% over the company’s market capitalization of about $5.9 billion as of May 10.
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