The agreement comes nearly six weeks after reports emerged that Intel had submitted a bid for Mellanox worth about $6 billion. It's also about a year-and-a-half since Intel bought Mobileye, a maker of collision-avoidance systems for cars, in a $15.3 billion move in 2017 that established a new top end of the market for Israeli tech deals.
Mellanox was founded in 1999 in Yokenam, Israel, and it now maintains dual headquarters in that city and Sunnyvale, CA. The company reportedly has about 3,000 employees, two-thirds of whom are based in Israel. Mellanox disclosed revenue of around $1.1 billion for 2018, a 26% YoY uptick.
The acquisition is set to be the biggest in Nvidia's history by an order of magnitude, topping a $367 million takeover of Icera in 2011. The company will likely use Mellanox's tech to improve its data centers, which helped prop up Nvidia's revenue in 2018 amid lower-than-expected sales of graphics cards due in part to volatile cryptocurrency markets.
Activist hedge fund Starboard Value currently holds a 5.9% stake in Mellanox, down from 10.7% after Starboard sold off more than a million shares in February. The firm has advocated for a sale of the chipmaker since first buying into the business in 2017, a battle that included an agreement for Starboard to place three new directors on the Mellanox board last June.
Nvidia shares (NASDAQ: NVDA) and Mellanox shares (NASDAQ: MLNX) closed Monday up at the news, with Nvidia gaining around 7% while Mellanox picked up around 8%.
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