Mellanox And Nvidia One Step Closer, But Mellanox Still Fine If The Deal Doesn't Happen

There’s been a meaningful “will they or won’t they” discount with Mellanox (MLNX) shares since the announcement of Nvidia’s (NVDA) offer for the company. While discounts to bid prices are normal, Mellanox had until recently been pretty much stuck in a band between $106 and $115 (below the $125 bid price) as investors wondered and worried if the deal would get all of the necessarily regulatory approvals.

Whether China approves the deal is the big remaining unknown, as Nvidia and Mellanox together will have a significant influence over China’s data centers and AI developments. Likewise, the Chinese government may view the deal approval as a point of leverage in ongoing, often contentious, discussions with the U.S. regarding trade policy (including restrictions on Huawei and on technology sales more broadly. While Mellanox shares would certainly fall if the deal were to collapse, I think support isn’t all that far away and Mellanox could well attract another buyer.

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Mellanox And Nvidia One Step Closer, But Mellanox Still Fine If The Deal Doesn't Happen