SAN FRANCISCO: Nvidia Corp agreed to buy chip maker Mellanox Technologies for $6.9 billion, gaining expertise to help it push into the growing market for data center components.
Nvidia is paying $125 a share in cash for the American-Israeli company, which makes chips used to speed the flow of information across computer servers.
That’s a 14% premium to its Friday close of $109.38 with the target’s shares surging in pre-market trade on Monday.
Nvidia’s biggest-ever acquisition is aimed at accelerating momentum for one of Chief Executive Officer Jensen Huang’s most successful initiatives. The company’s founder built a multi-billion-dollar business in under three years by persuading owners of data centers that his graphics chips are the right solution for processing the increasingly large amounts of information needed for artificial intelligence work, such as image recognition.
“The data center is more important than ever,” Huang said in an interview. Nvidia is said to have won a bidding process, beating out rivals including Intel. Mellanox’s market value, now at about $5.9 billion, started to run up last year when activist investors took stakes and talk that it was up for sale emerged.
Shares of the company, which is based in Yokneam, Israel and Sunnyvale, California, have risen 66% from their October trough and 18% just this year.