Nvidia, Mellanox await Chinese acceptance of filing for $6.9 billion deal

13 August 2019 10:52am

6 August 2019, by Yonnex Li

US chipmaker Nvidia's notification of its planned $6.9 billion takeover of Israeli peer Mellanox was still awaiting formal acceptance by China's competition regulator, MLex has learned.

The unusually long period it is taking for the State Administration for Market Regulation to officially start its merger review clock is said to be partly attributable to China-specific concerns surrounding the industry.

Nvidia spokesman Robert Sherbin declined to comment on the matter when MLex contacted him for confirmation on the status of the filing.

MLex first reported on May 21 that Nvidia had already submitted paperwork for the deal to SAMR. In other words, the notification has remained unaccepted for at least 11 weeks.

It typically takes SAMR about four to eight weeks to formally accept a merger notification, according to Chinese competition lawyers.

Recent decisions involving conditional clearances published by the regulator also shed light on the time that elapses between the notification of a potentially problematic deal and the point at which the 180-day review cycle begins.

Finnish cargo-handling machinery maker Cargotec had to wait six weeks before its paperwork for the acquisition of TTS Group's marine and offshore businesses was formally accepted. It took eight weeks for American chip equipment maker KLA-Tencor to have its submission relating to its Orbotech buyout officially accepted.

The gap for United Technologies' takeover of Rockwell Collins was four weeks, and that for Italian eyewear maker Luxottica's merger with French lens-maker Essilor was 12 weeks.

SAMR has consistently cited in its decisions the need for notifying parties to supplement notification materials deemed incomplete as reasons for delayed formal acceptance.

California-based Nvidia is best known for its work as a designer of graphics processing units. Mellanox manufactures chips that power high-speed Ethernet and InfiniBand networks that interconnect servers for company data centers, cloud computing, and computer data storage.

Details of the issues leading to SAMR's protracted pre-acceptance review are not yet available, but both companies are heavyweights in the supercomputer sector, which is currently at the center of the ongoing China-US trade war.

The US Bureau of Industry and Security on June 24 added Beijing-based Sugon and four other Chinese entities to its so-called Entity List, limiting their access to US technology because of risks to the country's national security. Sugon, the first supercomputer brand in China, sources components from both Nvidia and Mellanox.

Shares of both Nvidia and Mellanox are traded on Nasdaq.

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