Report: Intel Eyeing Israeli Chipmaker Mellanox In $6B Cash-And-Stock Deal

Even as chipmakers face a tough semiconductor cycle and an uncertain macro environment, Intel Corporation INTC is apparently unfazed by the surrounding gloom and is looking to invest in inorganic growth.

What Happened

Intel is among the bidders for chipmaker Mellanox Technologies, Ltd. MLNX, Israeli publication Calcalistech reported, citing a person familiar with the matter.

Mellanox is an Israel-based provider of chip-based interconnect products that facilitate data transmission between servers and storage and are primarily used in cloud computing.

Recently, Intel tabled a $6-billion cash and stock bid for Melllanox, with the per-share value offered representing a 35-percent premium over the latter's closing price of $81.67 Tuesday, Calcalistech said.

Buckling under pressure from activist investor Starboard Value, Mellanox appointed three independent members to its board in June 2017. Subsequently, there were reports of Mellanox hiring a bank to advise it on takeover interest from two unnamed companies.

CNBC later revealed Xilinx, Inc. XLNX to be among the potential suitors.

Incidentally, Intel acquired Mobileye — another Israeli company that develops vision-based advanced driver-assistance systems — for $15.3 billion in August 2017.

Why It's Important

The deal could boost Intel's data center business in the fluid chipmaker environment. Intel is both a rival as well as a customer of Mellanox, the Israeli website reported.

Intel's data center unit fared below expectations in the recently reported fourth quarter, with the firm predicting a year-over-year decline for the business in Q1.

Mellanox shares were trading up 5.3 percent at $86 at the time of publication Wednesday, while Intel was down slightly at $46.51. 

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