Over $7 Billion Invidia Is Close To Acquiring Mellanox, A Server Chip Maker

Beijing time, March 11, people familiar with the matter said Sunday that Yingweida, a chip maker, was close to buying Mellanox Technologies, an Israeli server chip maker, for more than $7 billion in cash.

This will be the largest acquisition in the history of Invida, which will boost its server chip manufacturing business and reduce its dependence on the video game industry.

Invida's bid for Mellanox exceeded Intel's, and the deal will be announced as soon as Monday, according to people familiar with the matter. Intel and Mellanox have not yet commented. Invida declined to comment. Calcalist, a financial news website, reported earlier Sunday that Invidia's offer for Mellanox outweighed Intel's.

Mellanox's chips drive servers connected to high-speed networks. The company is based in Israel and has offices in the United States. By Friday's close, Mellanox had a market capitalization of about $5.9 billion.

Data center revenue accounts for nearly a third of Nvidia's total revenue. Over the past few years, under the leadership of CEO Huang Renxun, Yingweida has made rapid growth, but the slowdown in China's business growth and the cooling of the tightening currency boom have begun to put pressure on the company's revenue in recent quarters.

Invida's current market capitalization is $91 billion. In January, it cut its fourth-quarter revenue forecast by $500 million due to weak demand for game chips in China and lower sales of data centers than expected. Invida's acquisition of Mellanox was also a victory for rights hedge fund Starboard Value LP. Starboard is a Mellanox shareholder, and the two sides reached an agreement last year on the composition of Mellanox's board of directors.