Graphics chip maker Nvidia and networking specialist Mellanox announced today that the two companies have entered into a definitive agreement under which Nvidia will acquire Mellanox. Under the terms of the agreement, Nvidia, based in Santa Clara, California, will acquire all of the issued and outstanding common stock of Mellanox, based in Sunnyvale, California, and Yokneam, Israel, for $125 per share in cash, representing a total enterprise value of approximately $6.9 billion. Upon closing, the merger is expected to be immediately accretive to Nvidia's non-GAAP gross margin and non-GAAP earnings per share and free cash flow.

The acquisition will combine two of the world's leading high performance computing (HPC) companies. Together, Nvidia's compute platforms and Mellanox's networking platforms power over 250 of the world's TOP500 supercomputers and both companies have all major cloud service providers and computer manufacturers as customers.The data and compute intensity of modern workloads in AI, scientific computing and data analytics is growing exponentially and has led to enormous power demands in hyperscale and enterprise data centers. While computing power requirements are increasing, CPU performance cannot keep pace as Moore's Law no longer applies.

This has led to the introduction of accelerators in traditional computers with Nvidia graphics processorsand Mellanox's intelligent networking solutions. Data centers in the future will be designed as huge computing machines with tens of thousands of compute nodes, holistically designed with their interconnects for optimal performance.

Jensen Huang, founder and CEO of Nvidia: "We are excited to combine Nvidia's Accelerated Computing platform with Mellanox's world-renowned Accelerated Networking platform under one roof to create next-generation data center solutions.

© Nvidia

A pioneer in high-performance interconnect technology, Mellanox had developed the InfiniBand interconnect technology that, along with its Ethernet chips, is now used in over half of the world's fastest supercomputers and in many leading large-scale data centers. With Mellanox, Nvidia aims to optimize data center workloads across the entire compute, network and storage stack to deliver higher performance, higher utilization and lower operating costs for customers.

"The advent of AI and big data analytics and billions of concurrent computer users is driving skyrocketing demand in the world's data centers," said Jensen Huang, founder and CEO of Nvidia. "Meeting this demand requires holistic architectures that connect a large number of fast compute nodes over the Internet into one giant computing machine."
"We are excited to bring together Nvidia's accelerated computing platform with Mellanox's world-renowned accelerated networking platform under one roof to create next-generation data center solutions," added Huang.

"We share the same vision for accelerated computing as Nvidia," said Eyal Waldman, founder and CEO of Mellanox. "Bringing our two companies together is a natural extension of our long-standing partnership and a great fit with our shared performance-driven cultures."

The companies have a long history of collaboration and joint innovation, which is reflected in their recent contributions to building the two fastest supercomputers in the world, Sierra and Summit, operated by the U.S. Department of Energy. Many of the world's leading cloud service providers also utilize Nvidia GPUs and Mellanox networking building blocks. Nvidia and Mellanox share a common performance-oriented culture that enables seamless integration.

Once the merger is complete, Nvidia intends to continue to invest in local excellence and talent in Israel, one of the world's most important technology centers. Customer service and support will not change as a result of this transaction.

Nvidia intends to fund the acquisition with cash on its balance sheet. In addition, there is no change to the previously announced capital repayment program for the remainder of fiscal year 2020. The transaction has been approved by the boards of directors of both companies and is expected to close by the end of calendar year 2019, subject to regulatory approvals and other customary closing conditions, including approval of the merger agreement by Mellanox shareholders.