To further expand its end-to-end connectivity offerings for server and storage systems, Mellanox Technologies has inked a definitive agreement to acquire Voltaire Ltd., a supplier of data center fabrics, for approximately $218 million. Mellanox will buy 100 percent of Voltaire’s outstanding shares at $8.75 per share.

According to the buyer, the terms of transactions have been approved by the boards of directors of both the companies. And the deal is expected to close in the first quarter of 2011, subject to certain closing conditions, said Mellanox.

Market research firm Gartner’s data shows that worldwide server shipments are expected to increase from about 9 million in 2010 to 11.2 million in 2014. Likewise, storage systems are projected to grow from 1.8 million in 2010 to 3.2 million in 2014. 

Mellanox plans to combine the workforces of both the companies under one unified management team. Plus, for the time being, intends to retain the existing product lines of both the companies to ensure continuity for customers and partners of the two companies. However, in the future some lines will be converged, but no details were furnished.

“The combination of Mellanox and Voltaire will create a leading provider of connectivity solutions for our customers by leveraging the complementary strengths of our companies. 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,” said Eyal Waldman, president, chairman and CEO of Mellanox Technologies, in a company statement.

The combined businesses currently have approximately 700 employees and achieved revenues of $217 million for 12 months ended September 30, 2010. Also, Mellanox said that this acquisition will help the company achieve meaningful revenue and cost synergies over time, with estimated, annualized cost synergies of at least $10 million by the end of 2012.

Ronnie Kenneth, chairman and CEO of Voltaire, has indicated intension to join the board of directors of Mellanox.