7 companies looked at buying semiconductor firm Mellanox. Here's how Nvidia won the $6.9 billion deal. (NVDA, MLNX)

Mellanox CEO Eyal Walden

Mellanox, an Israeli semiconductor company, was acquired by Nvidia in March for $6.9 billion.
New company filings reveal that things could have gone much differently.
Mellanox spoke with seven different companies about a potential acquisition, and banks JPMorgan and Credit Suisse ran a process that drove its offers up from $102 per share to $125.
Here's how Nvidia won the deal.
Read more on Business Insider's homepage.

Mellanox spent nearly a year in talks with potential acquirers before the Israeli semiconductor company agreed to sell to Nvidia for $6.9 billion, according to a proxy statement filed Monday.

During that 11-month period, seven different publicly traded technology companies took a look at the company. Through a long and competitive negotiation process, Mellanox and its bankers at Credit Suisse and JPMorgan transformed an early bid of $102 per share into its final sales prices of $125 per share, growing the deal's value by $1.3 billion.

Nvidia said its merger with Mellanox will help create data centers of the future.

The names of the seven interested parties weren't revealed in the filing — but there are a few clues.

Reports last year indicated that Microsoft took a look at the company. Though it's unclear how far the company got in the process.

Xilinx, a $30 billion semiconductor company, was also in the news. Xilinx was the first company to bid on Mellanox, Business Insider has learned, which means the company is referenced in the document as Party A. Xilinx declined to comment.

Then in April, nearly a month after the deal was announced, Intel Capital's President Wendell Brooks said at an event that Intel's bid was a few dollars per share shy of Nvidia's offer. This means, based on the event described in the filing, that Intel is the company referred to as Party B. Intel declined to comment.

Of the seven companies that expressed interest, Mellanox entered into confidentiality agreements to move talks forward with only four. Of those four, we know Xilinx, Intel, and Nvidia, with the identity of the fourth still unknown.

Here's how the deal came together as the four bidders vied to win the acquisition.

Xilinx kicked off the whole process

nvidia jen-hsun huang ceo Mellanox's sale process started out in April 2018 with an email from Xilinx CEO Victor Ping to Mellanox CEO Eyal Waldman. Ping wanted to meet up to discuss a possible "strategic collaboration" between the two companies. The pair met up on June 12, but didn't discuss a possible acquisition until August 28, according to the proxy filing.

Xilinx made its first offer of $102 per share in late September, but Waldman and the board thought it was too low. At that price, Mellanox would have been worth around $5.6 billion.

The board agreed to move forward with due diligence processes with Xilinx if it was "prepared to significantly improve the per share price." But on the side, the board agreed that Waldman, along with JPMorgan, would reach out to Nvidia and Intel to see if they also wanted to make an offer. Soon after, Credit Suisse was hired to help with the process.

By November 19, Mellanox had three different offers, but none of them satisfied the board. At $107 a share, Intel's bid was the highest. On November 25, a fourth bidder, Nvidia, made its first offer of $105 per share — still below Mellanox's highest existing offer.

Weeks passed and the bidders raised their offers. At the end of January, the board decided not to move forward with the company referred to in the proxy as "Party D."

On February 26, Nvidia raised its bid to $115 per share. Xilinx raised its offer to $109.75. The next day, Intel raised its offer to $115.

On February 28, the process got more dramatic. The Mellanox team told Xilinx it had been outbid and wouldn't move forward in the process. But Xilinx's team protested and raised its offer to $115.

One day later on March 1, Xilinx emailed Mellanox to withdrawal its new high offer. Then on March 2, Mellanox board member Greg Waters met with Xilinx's CEO, who once again switched gears and said he was still interested.

The offers kept going up until March 7 when Mellanox's board made its decision.

Ultimately, Xilinx bid $121, Intel bid $122.50 and Nvidia bid $125, according to the proxy.

Nvidia had won Mellanox by just $2.50 per share, and on March 11, nearly 11 months after that first inquiring email was sent by Xilinx, Nvidia and Mellanox announced the deal.

Know which other companies took a look at Mellanox? Email the author at bpeterson@businessinsider.com or direct message on Twitter @beckpeterson. Secure messaging available upon request. You can also contact Business Insider securely via SecureDrop.

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