Mergers and Acquisitions, Mergers and Acquisitions, Hardware

Nvidia Acquiring Arm: 10 Things to Know About Pending Chip Giant Buyout Deal

Nvidia is acquiring  Arm Limited from SBG and the SoftBank Vision Fund for $40 billion, the companies announced September 13. Here are 10 things to know about the massive -- though pending -- chip company acquisition.

Side note: This is M&A deal number 367 that ChannelE2E has covered so far in 2020. See the full M&A deal list here.

Nvidia Buying Arm: 10 Things to Know

1. AI Scale: The deal "Unites Nvidia leadership in artificial intelligence with Arm’s vast computing ecosystem to drive innovation for all customers," the companies say.

2. European Footprint: Nvidia will "expand Arm’s R&D presence in Cambridge, UK, by establishing a world-class AI research and education center, and building an Arm/NVIDIA-powered AI supercomputer for groundbreaking research," the buyer said.

3. Vendor-Neutral Focus: Nvidia will "continue Arm’s open-licensing model and customer neutrality and expand Arm’s IP licensing portfolio with NVIDIA technology," Nvidia said.

4. Payment Terms: Nvidia will pay to SoftBank $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, the companies say.

5. Nvidia Stake: SoftBank will gain a stake in Nvidia, expected to be under 10 percent.

6. Lengthy Deal Review: The deal could take roughly 18 months to earn earn regulatory approval -- including regulatory reviews from the U.K.China, the European Union and the United States.

Jen Hsun Huang
Jensen Huang, CEO, Nvidia

7. Nvidia CEO Perspectives: In a lengthy statement about the deal, Nvidia CEO Jensen Huang said:

“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.”

Masayoshi Son, Softbank

8. Softbank Perspectives: Masayoshi Son, chairman and CEO of SBG, added"

“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.”

Simon Segars, CEO, Arm

9. Arm Perspectives: Concluded Simon Segars, CEO of Arm:

“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.”

10. Competitive Reaction: The Nvidia-Arm deal is "likely to meet strong opposition from Nvidia's chip industry rivals, analysts say, with murmurs of protest emerging in South Korea and China within hours of the deal's announcement," Reuters reports.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.