Chipmaker Nvidia Corp. is nearing a deal to acquire peer Mellanox Technologies Ltd. for more than US$7 billion in cash, Reuters reports, citing a person familiar with the matter.
The deal would be Nvidia’s biggest-ever acquisition and boost its business of making chips for data centers, allowing it to reduce its reliance on the video game industry, for which it is best known as a major technology vendor.
Nvidia has outbid Intel Corp. in the auction for Mellanox and could announce a deal as early as Monday, the person said. The source asked not to be identified because the negotiations are confidential.
Mellanox’s chips power high-speed networks connecting servers. The company, which is based in Israel and the United States, had a market capitalization at the end of trading on Friday of about US$5.9 billion.
Data center revenue accounts for nearly a third of Nvidia’s sales. Nvidia, based in Santa Clara, California, has grown at a rapid pace in the past few years, under chief executive Jensen Huang, but a slowdown in China and a fading cryptocurrency craze have started to weigh on its sales in recent quarters.
In January, Nvidia, which has market capitalization of US$91 billion, cut its fourth-quarter revenue estimate by half a billion dollars because of weak demand for its gaming chips in China and lower-than-expected data center sales.
Nvidia’s acquisition of Mellanox would also represent a win for activist hedge fund Starboard Value LP, which is a shareholder of the company and reached a deal with it last year over the composition of its board.
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