The $125-a-share cash offer for Mellanox is a 14 percent premium to Friday's close of $109.38. It is believed that Nvidia Corporation (Nasdaq: NVDA) has joined the list of candidates to buy Mellanox, alongside Intel, Xilinx, and Microsoft, which have been touted as possible buyers in the past.
"We want to double down on data centres", he said. "This combination allows us to innovate faster". Shares of the company, which is based in Yokneam, Israel, and Sunnyvale, California, have risen 66 per cent from a low in October and 18 per cent just this year.
The acquisition process was "very competitive, " Huang said.
The growing reams of data generated means work on AI and large databases needs to be split between multiple computers. 'Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant data centre-scale compute engine. "NVDA's computing platform and MLNX's interconnects will power over 250 of the world's Top 600 supercomputers, and the two companies have every CSP and computer market as customers".
"This could reinvigorate M&A discussions across the entire sector".
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Early response from the industry analyst community has been positive. Nvidia and Mellanox, meanwhile, have worked together in the past but the acquisition creates new opportunities for the company in terms of datacenter-caliber computing tech.
Nvidia is best known for graphical processors, which are used in video and game production but have also become surprisingly proficient at intensive computing tasks such as cryptocurrency mining and artificial intelligence.
And Shebly Seyrafi, an analyst at FBN Securities, agrees that the unit will provide broad solution sets to overcome bottlenecks in the data-center market.
Mellanox's revenue surged 26 per cent a year ago, topping US$1 billion for the first time.
Nvidia gets more revenue diversification and data center sales.
The transaction now needs approval from regulators. That process has become more complicated due to the USA trade stand-off with China.