Microsoft Eyeing Mellanox Acquisition To Boost Cloud Services: Report

Microsoft is looking to acquire data center solutions giant Mellanox Technologies to enhance its cloud services capabilities, according to a report by TheMarker.

Microsoft has hired Goldman Sachs to negotiate the Mellanox acquisition, according to Israel-based financial publication TheMarker, citing unnamed market sources. Microsoft is a large client of Mellanox and plans to leverage the Israel-based vendor to strengthen its services in cloud computing to better compete against Amazon and Google, said TheMarker.

The report comes just one month after CNBC reported that Mellanox—a provider of server, storage, chip and networking solutions and services—was being pursued by Xilinx for acquisition. The Xilinx deal was estimated to top $100 per share, which valued Mellanox at $5.5 billion.

Mellanox, which received a 5-star rating in CRN's 2018 Partner Program Guide, has a market cap of roughly $5 billion. The company offers a slew of data center products from Ethernet switches, chips and InfiniBand intelligent interconnect solutions to servers, storage and hyper-converged infrastructure.

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In a statement to CRN, Mellanox said it does not comment on rumors and speculations. Microsoft did not respond to comment by press time.

In June, Mellanox appointed three new board members in a settlement with activist investment firm Starboard Value after the hedge fund, which owns a 10.5 percent stake in Mellanox, said it planned to oust all sitting directors.

In October, Mellanox reported quarterly earnings revenue of $279 million, up 24 percent year over year. The company shares were trading at $93.12 as of Wednesday afternoon.