Mellanox, the Israeli maker of network adapter cards and silicon, as well as InfiniBand and gateway silicon and switch systems, has entered into an agreement to buy a US-based provider of scale-out data center fabrics Voltaire.

Both companies' boards have unanimously approved terms of the all-cash transaction, whereby Mellanox, headquartered in both Yokneam, Israel, and Sunnyvale, US, will buy all outstanding ordinary shares of Boston-based Voltaire at $8.75 per share. The deal, expected to close in the first quarter of 2011, puts Voltaire's total equity value at about $218 million.

Mellanox president, chairman and CEO Eyal Waldman said the combined company will lead in the market for connectivity solutions by leveraging complementary strengths of the two entities. "Together, we believe the combined company will be a stronger business partner and system solutions provider, delivering customers a comprehensive range of end-to-end connectivity solutions," he said in a statement.

According to a news release, the combined company is expected have a stronger position in the market for end-to-end connectivity solutions for data center storage and servers. Together, the two businesses made $217m in sales during the 12 months ended 30 September 2010.

The Mellanox board of directors "has indicated its intention" to make Voltaire chairman and CEO Ronnie Kenneth one of the board members and Kenneth has in turn indicated that he is interested in joining the board.

Once merged, the buyer expects to run the combined business out of both companies' current offices in US, Israel and elsewhere around the world. Mellanox plans to retain both firms' existing product lines, which in the future will be converged and delivered as new product generations.