Xilinx prepares a $5.5 billion offer to Acquire Mellanox

8 November, 2018

CNBC reported that Xilinx had hired Barclays to arrange the tender offer. Mellanox' shares on Nasdaq jumped to $92.7, giving the company market cap of $4.9 billion

Mellanox CEO Eyal Waldman

Xilinx is planning to bid for Mellanox at $100 per, giving it a total price of approximately $5.5 billion. CNBC quoted unidentified sources, claiming that Xilinx had hired Barclays to advise in promoting the deal. This follows earlier CNBC report of published in October 25, saying that Mellanox appointed an investment bank to explore its sale. The news drove Mellanox’ shares price in NASDAQ from $65.9 two weeks ago, to $92.7 today, giving the Israeli company a market cap of more than $4.9 billion.

The Theoretical Test of Eyal Waldman

Eyal Waldman, Mellanox’ Founder, Chairman and President  (photo above) never denied the possibility of selling the company, but said that it is pointless to sell a company while it grows more than 30% annually. Last week Mellanox published preliminary information Q3 results: Record sales of $ 279.2 million, up 24% compared with the third quarter of 2008, with first nine months growth of 27.5%, to $798.7 million. Its annual estimate is $1.1 billion sales in 2018, compared to $864 million in 2017. That is below the theoretical parameterof Waldman.

Mellanox' Stocks in NASDAQ during the last week
Mellanox’ Stocks in NASDAQ during the last week

Despite the separate fields of activity of the two companies, both are at the heart of a joint technological change.

Mellanox provides fast connectivity solutions for data centers, cloud infrastructures and supercomputers. It is considered the world’s largest provider of InfiniBand solutions for supercomputers. Its strategy is based on complete solutions based on its own core semiconductor chips. Xilinx provides programmable solutions on-chip that includes FPGAs, high-speed communication interfaces, and multiple processing technologies. They both are driven by the same trend: Growth of Cloud and Data centers that need provide on demand services at an accelerating speeds.

Why Xilinx needs Mellanox

In January of this year Moshe Gavrielov, Xilinx CEO for the last 10 years, left the office and was replaced by Victor Peng. In August this year, Peng announced a new strategy for the company, creating a new computing infrastructure called Adaptive Compute Acceleration Platform – a concept that the company has developed over the last four years with $1 billion investment.

The idea is that the future computing systems will be different: they will be flexible, will change their architecture and resources according to the changing needs, and will depend on very fast communication channels within the processing chips and the various processing modules in the overall data center. It is easy to see how Mellanox’s fast connectivity technologies can be integrated into this strategy.

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Posted in: News , Semiconductors

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