NVIDIA to Acquire Arm for $40 Billion from Softbank

A few weeks ago, I read rumors about NVIDIA acquiring Arm, and I thought it was probably just a joke because of the obvious conflicts of interests since NVIDIA would be providing IP to competitors, who may then be wary of starting designs based on Arm NVIDIA cores and GPUs.

But guess what? That’s now official with NVIDIA writing on their blog they had a definitive agreement under which NVIDIA will acquire Arm Limited from SoftBank Group Corp. (SBG) and the SoftBank Vision Fund (together, “SoftBank”) in a transaction valued at $40 billion.

NVIDIA acquires Arm

I seldom write about business news, but it looks like in this case there may be repercussions. Let’s see details about the transaction:

Under the terms of the transaction, which has been approved by the boards of directors of NVIDIA, SBG and Arm, NVIDIA will pay to SoftBank a total of $21.5 billion in NVIDIA common stock and $12 billion in cash, which includes $2 billion payable at signing. The number of NVIDIA shares to be issued at closing is 44.3 million, determined using the average closing price of NVIDIA common stock for the last 30 trading days. Additionally, SoftBank may receive up to $5 billion in cash or common stock under an earn-out construct, subject to satisfaction of specific financial performance targets by Arm.

NVIDIA will also issue $1.5 billion in equity to Arm employees.

NVIDIA intends to finance the cash portion of the transaction with balance sheet cash. The transaction does not include Arm’s IoT Services Group.

The proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals for the U.K., China, the European Union and the United States. Completion of the transaction is expected to take place in approximately 18 months.

First, it’s not a done deal as the transaction may require government approvals, and if it goes through it will be a 2022 story. I’d not be surprised if the deal is killed sometimes in 2021, as we’ve seen in the past with Qualcomm trying to acquire NXP. The deal does not include the whole of Arm with Arm’s IoT Services Group.

NVIDIA tries to reassure all stakeholders that it will not make major changes in the way the company operates, but increase investments. First, Arm will remain headquartered in Cambridge, and NVIDIA will build a world-class AI research and education center supporting developments in healthcare, life sciences, robotics, self-driving cars, and other fields. The company is also said to continue to operate its “open-licensing model” while maintaining global customer neutrality, and the addition of NVIDIA GPU, and AI technology.

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