The data center industry is witnessing an acquisition that brings together two of the world’s leading companies in high performance computing (HPC). US chip supplier NVIDIA announced the acquisition of the high performance networking company Mellanox Technologies Ltd for $6.8 billion. The deal will be a significant milestone for NVIDIA in their attempts to boost its data center business and artificial intelligence business.
As per the agreement, NVIDIA will acquire all of the issued and outstanding common shares of Mellanox for $125 per share in cash, representing a total enterprise value of approximately $6.9 billion. Post close, the transaction is expected to be immediately accretive to NVIDIA’s non-GAAP gross margin, non-GAAP earnings per share and free cash flow. NVIDIA won the deal after a competitive bidding process. According to sources familiar with the matter, Intel was a top contender along with Xilinx, Microsoft, and Broadcom.
“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 datacenter-scale computing solutions. I am particularly thrilled to work closely with the visionary leaders of Mellanox and their amazing people to invent the computers of tomorrow,” said Jensen Huang, founder and CEO of NVIDIA.
It is believed that more and more cloud and enterprise data centers will take on HPC characteristics as new workloads. The acquisition of Mellanox will help NVIDIA optimize datacenter-scale workloads across the entire computing, networking, and storage stack to achieve higher performance, greater utilization, and lower operating cost for customers.
“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s datacenters. Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine,” added Jensen Huang.
Both companies boast of a long-term partnership. It is evident in their recent contributions in building the world’s two fastest supercomputers, Sierra and Summit, operated by the U.S. Department of Energy. They also have every major cloud service provider and computer maker on their customer list.
“We share the same vision for accelerated computing as NVIDIA. Combining our two companies comes as a natural extension of our longstanding partnership and is a great fit given our common performance-driven cultures. This combination will foster the creation of powerful technology and fantastic opportunities for our people,” said Eyal Waldman, founder and CEO of Mellanox.