Deal
at $350 Million Discussed, but Price Could Rise to $375 Million
By Orr Hirchanuge,
The wall street journal
TEL AVIV— Amazon.com Inc.
said it has agreed acquire secretive Israeli chip designer Annapurna Labs Ltd., a potential boost
to its rapidly growing business that rents computing power to other companies.
An Amazon spokeswoman
confirmed the deal after The Wall Street Journal and others reported on
Thursday that the two companies were in advanced talks. She declined to
disclose terms.
Annapurna wasn’t
immediately available for comment.
Amazon had been
discussing paying $350 million, according to two people familiar with the
matter, though they said the price could rise to $375 million, depending on
certain conditions.
Based in Yoqneam, in
Israel’s north, Annapurna Labs was founded in 2011 by Avigdor Willenz, founder
of the chip-design company Galileo Technologies Ltd.; Marvell
Technology Group Ltd. bought Galileo for $2.7 billion in
2000.
Originally funded by Mr.
Willenz and people related to him, Annapurna hasn’t revealed the technology it
is developing. The people familiar with the matter said Annapurna develops
midrange networking chips for data centers that transmit more data and use less
power.
Seattle-based Amazon, a
global market leader in cloud services and online retailing, likely would use
Annapurna’s designs in its extensive data centers to lower operating costs.
Amazon Web Services rents
computing power and data storage to more than one million businesses. Amazon
doesn’t disclose revenue for the unit, but Piper Jaffray analyst Gene Munster
estimates that it could post nearly $6 billion in revenue this year, up from
$4.3 billion in 2014.