- NVIDIA Corporation (NASDAQ: NVDA) has confirmed to Pulse 2.0 about a deal to buy British chipmaker Arm Holdings from SoftBank Group Corp (OTCMKTS: SFTBY) and the SoftBank Vision Fund in a deal valued at $40 billion
Today in a statement sent to Pulse 2.0, NVIDIA Corporation (NASDAQ: NVDA) has confirmed a deal to buy British chipmaker Arm Holdings from SoftBank Group Corp (OTCMKTS: SFTBY) and the SoftBank Vision Fund in a transaction valued at $40 billion. The transaction is expected to be immediately accretive to NVIDIA’s non-GAAP gross margin and non-GAAP earnings per share.
This deal combines NVIDIA’s leading AI computing platform with Arm’s vast ecosystem to create the premier computing company for the age of AI, accelerating innovation while expanding into large and high-growth markets. And SoftBank will remain committed to Arm’s long-term success through its ownership stake in NVIDIA, expected to be under 10%.
As part of NVIDIA, Arm is going to continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success, with 180 billion chips shipped to-date by its licensees. And Arm partners will also benefit from both companies’ offerings, including NVIDIA’s numerous innovations.
SoftBank and Arm are fully committed to satisfying the undertakings made by SoftBank when it acquired Arm in 2016 — which are scheduled to complete in September 2021. And following the closing of the transaction, NVIDIA intends to retain the name and strong brand identity of Arm and expand its base in Cambridge. Arm’s intellectual property will remain registered in the U.K.
NVIDIA is going to build on Arm’s R&D presence in the U.K., establishing a new global center of excellence in AI research at Arm’s Cambridge campus. And NVIDIA will invest in a state-of-the-art Arm-powered AI supercomputer, training facilities for developers, and a startup incubator — which is going to attract world-class research talent and create a platform for innovation and industry partnerships in fields like healthcare, robotics, and self-driving cars.
The transaction has been approved by the boards of directors of NVIDIA, SBG, and Arm. NVIDIA is going to 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. And 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. Plus 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 is also going to issue $1.5 billion in equity to Arm employees.
NVIDIA is intending to finance the cash portion of the transaction with balance sheet cash. And the transaction does not include Arm’s IoT Services Group.
The proposed deal is subject to customary closing conditions, including the receipt of regulatory approvals for the U.K., China, the European Union and the United States. And completion of the transaction is expected to take place in approximately 18 months.
Morrison & Foerster is advising SoftBank Group Corp. and SoftBank Vision Fund in the sale of Arm Limited. And Morrison & Foerster was also lead counsel to SoftBank in its acquisition of Arm for c.$32 billion (£24 billion). The Morrison & Foerster deal team representing SoftBank on the transaction is led by Ken Siegel, managing partner of the firm’s Tokyo office, Eric McCrath, San Francisco corporate partner and co-head of the firm’s Corporate Department, and London corporate partner Gary Brown.
“AI is the most powerful technology force of our time and has launched a new wave of computing. In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”
“Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world. Uniting NVIDIA’s AI computing capabilities with the vast ecosystem of Arm’s CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe.”
“This combination has tremendous benefits for both companies, our customers, and the industry. For Arm’s ecosystem, the combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology.”
“Arm will remain headquartered in Cambridge. We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. And, to attract researchers and scientists from the U.K. and around the world to conduct groundbreaking work, NVIDIA will build a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology center.”
— Jensen Huang, founder and CEO of NVIDIA
“NVIDIA is the perfect partner for Arm. Since acquiring Arm, we have honored our commitments and invested heavily in people, technology and R&D, thereby expanding the business into new areas with high growth potential. Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm. This is a compelling combination that projects Arm, Cambridge and the U.K. to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in NVIDIA. We look forward to supporting the continued success of the combined business.”
— Masayoshi Son, chairman and CEO of SBG
“Arm and NVIDIA share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education. Delivering on this vision requires new approaches to hardware and software and a long-term commitment to research and development. By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators. My management team and I are excited to be joining NVIDIA so we can write this next chapter together.”
— Simon Segars, CEO of Arm
Disclosure: I own a small number of NVDA shares