NVIDIA to Acquire Mellanox for $6.9 Billion

  • Unites lea­ders in pro­ces­sing and inter­con­nect for the high per­for­mance com­pu­ting mar­ket
  • Builds on the com­pa­nies’ long histo­ry of col­la­bo­ra­ti­on and joint inno­va­ti­on
  • Expec­ted to be accre­ti­ve to NVIDIA’s non-GAAP gross mar­gin, non-GAAP EPS and free cash flow imme­dia­te­ly after clo­se

SANTA CLARA, Calif., and YOKNEAM, Isra­el, March 11, 2019 NVIDIA and Mel­lanox today announ­ced that the com­pa­nies have reached a defi­ni­ti­ve agree­ment under which NVIDIA will acqui­re Mel­lanox. Pur­suant to the agree­ment, NVIDIA will acqui­re all of the issued and out­stan­ding com­mon sha­res of Mel­lanox for $125 per sha­re in cash, rep­re­sen­ting a total enter­pri­se value of appro­xi­mate­ly $6.9 bil­li­on. Once com­ple­te, the com­bi­na­ti­on is expec­ted to be imme­dia­te­ly accre­ti­ve to NVIDIA’s non-GAAP gross mar­gin, non-GAAP ear­nings per sha­re and free cash flow.

The acqui­si­ti­on will unite two of the world’s lea­ding com­pa­nies in high per­for­mance com­pu­ting (HPC). Tog­e­ther, NVIDIA’s com­pu­ting plat­form and Mellanox’s inter­con­nec­ts power over 250 of the world’s TOP500 super­com­pu­ters and have as custo­mers every major cloud ser­vice pro­vi­der and com­pu­ter maker.

The data and com­pu­te inten­si­ty of modern workloads in AI, sci­en­ti­fic com­pu­ting and data ana­ly­tics is gro­wing expo­nen­ti­al­ly and has put enor­mous per­for­mance demands on hypers­ca­le and enter­pri­se dat­a­cen­ters. While com­pu­ting demand is sur­ging, CPU per­for­mance advan­ces are slo­wing as Moore’s law has ended. This has led to the adop­ti­on of acce­le­ra­ted com­pu­ting with NVIDIA GPUs and Mellanox’s intel­li­gent net­wor­king solu­ti­ons.

Dat­a­cen­ters in the future will be archi­tec­ted as giant com­pu­te engi­nes with tens of thousands of com­pu­te nodes, desi­gned holisti­cal­ly with their inter­con­nec­ts for opti­mal per­for­mance. 

An ear­ly inno­va­tor in high-per­for­mance inter­con­nect tech­no­lo­gy, Mel­lanox pionee­red the Infi­ni­Band inter­con­nect tech­no­lo­gy, which along with its high-speed Ether­net pro­duc­ts is now used in over half of the world’s fas­test super­com­pu­ters and in many lea­ding hypers­ca­le dat­a­cen­ters.

With Mel­lanox, NVIDIA will opti­mi­ze dat­a­cen­ter-sca­le workloads across the ent­i­re com­pu­ting, net­wor­king and sto­rage stack to achie­ve hig­her per­for­mance, grea­ter uti­li­za­ti­on and lower ope­ra­ting cost for custo­mers.

The emer­gence of AI and data sci­ence, as well as bil­li­ons of simul­ta­ne­ous com­pu­ter users, is fue­ling sky­ro­cke­ting demand on the world’s dat­a­cen­ters,” said Jen­sen Huang, foun­der and CEO of NVIDIA. “Addres­sing this demand will requi­re holistic archi­tec­tures that con­nect vast num­bers of fast com­pu­ting nodes over intel­li­gent net­wor­king fabrics to form a giant dat­a­cen­ter-sca­le com­pu­te engi­ne.

We’re exci­ted to unite NVIDIA’s acce­le­ra­ted com­pu­ting plat­form with Mellanox’s world-renow­ned acce­le­ra­ted net­wor­king plat­form under one roof to crea­te next-genera­ti­on dat­a­cen­ter-sca­le com­pu­ting solu­ti­ons. I am par­ti­cu­lar­ly thril­led to work clo­se­ly with the visio­na­ry lea­ders of Mel­lanox and their ama­zing peop­le to invent the com­pu­ters of tomor­row.”

We sha­re the same visi­on for acce­le­ra­ted com­pu­ting as NVIDIA,” said Eyal Wald­man, foun­der and CEO of Mel­lanox. “Com­bi­ning our two com­pa­nies comes as a natu­ral exten­si­on of our long­stan­ding part­nership and is a gre­at fit given our com­mon per­for­mance-dri­ven cul­tures. This com­bi­na­ti­on will fos­ter the crea­ti­on of power­ful tech­no­lo­gy and fan­tastic oppor­tu­nities for our peop­le.”

The com­pa­nies have a long histo­ry of col­la­bo­ra­ti­on and joint inno­va­ti­on, reflec­ted in their recent con­tri­bu­ti­ons in buil­ding the world’s two fas­test super­com­pu­ters, Sier­ra and Sum­mit, ope­ra­ted by the U.S. Depart­ment of Ener­gy. Many of the world’s top cloud ser­vice pro­vi­ders also use both NVIDIA GPUs and Mel­lanox inter­con­nec­ts. NVIDIA and Mel­lanox sha­re a com­mon per­for­mance-centric cul­tu­re that will enab­le seam­less inte­gra­ti­on.

Once the com­bi­na­ti­on is com­ple­te, NVIDIA intends to con­ti­nue inves­ting in local excel­lence and talent in Isra­el, one of the world’s most important tech­no­lo­gy cen­ters. Custo­mer sales and sup­port will not chan­ge as a result of this tran­sac­tion.

Addi­tio­nal Tran­sac­tion Details

Post clo­se, the tran­sac­tion is expec­ted to be imme­dia­te­ly accre­ti­ve to NVIDIA’s non-GAAP gross mar­gin, non-GAAP ear­nings per sha­re and free cash flow. NVIDIA intends to fund the acqui­si­ti­on through cash on its balan­ce sheet. In addi­ti­on, the­re is no chan­ge to its pre­vious­ly announ­ced capi­tal return pro­gram for the rest of fis­cal 2020. The tran­sac­tion has been appro­ved by both com­pa­nies’ boards of direc­tors and is expec­ted to clo­se by the end of calen­dar year 2019, sub­ject to regu­lato­ry appro­vals as well as other custo­ma­ry clo­sing con­di­ti­ons, inclu­ding the appro­val by Mel­lanox share­hol­ders of the mer­ger agree­ment.

Advi­sors

Gold­man Sachs & Co. LLC ser­ved as exclu­si­ve finan­ci­al advi­sor to NVIDIA and Jones Day ser­ved as legal advi­sor. Credit Suis­se Group and J.P. Mor­gan Cha­se & Co. ser­ved as finan­ci­al advi­sors to Mel­lanox and Lat­ham & Wat­kins, LLP and Her­zog Fox & Nee­man ser­ved as legal advi­sors.

Con­fe­rence Call and Web­cast Details

NVIDIA will con­duct a web­cast at 5:30 a.m. PT today to dis­cuss the tran­sac­tion. The web­cast and a copy of the pre­sen­ta­ti­on mate­ri­als can be found on NVIDIA’s Inves­tor Rela­ti­ons web­site at investor.nvidia.com. A web­cast replay and a copy of the web­cast pre­sen­ta­ti­on mate­ri­als will also be avail­ab­le at investor.nvidia.com.

About Mel­lanox
Mel­lanox (NASDAQ: MLNX) is a lea­ding sup­plier of end-to-end Ether­net and Infi­ni­Band smart inter­con­nect solu­ti­ons and ser­vices for ser­vers and sto­rage. Mel­lanox inter­con­nect solu­ti­ons increa­se dat­a­cen­ter effi­ci­en­cy by pro­vi­ding the hig­hest through­put and lowest laten­cy, deli­vering data fas­ter to app­li­ca­ti­ons and unlo­cking sys­tem per­for­mance capa­bi­li­ty. Mel­lanox offers a choice of fast inter­con­nect pro­duc­ts: adap­ters, swit­ches, soft­ware and sili­con that acce­le­ra­te app­li­ca­ti­on run­ti­me and maxi­mi­ze busi­ness results for a wide ran­ge of mar­kets inclu­ding high per­for­mance com­pu­ting, enter­pri­se dat­a­cen­ters, Web 2.0, cloud, sto­rage and finan­ci­al ser­vices. More infor­ma­ti­on is avail­ab­le at http://www.mellanox.com/.