Nvidia to buy chipmaker from SoftBank

Nvidia buys ARM for $ 40 billion from SoftBank

The deal, announced on Sunday, will be financed through a combination of cash and stocks, the companies said in a joint statement.

The movement would allow Νβίδια (NVDA) – which makes mainly graphics processors for PC games and self-driving cars – to become the industry leader in more connected devices, including smartphones, computers, robotics and 5G, wrote CEO Jensen Huang in letter to employees on Sunday.
ARM designs brands used by apple (AAPL) and other major smartphone manufacturers. The company is based in Cambridge and is known as one of the most successful technology companies in Britain.

Nvidia said on Sunday it plans to maintain its Arm headquarters in Cambridge and expand its campus with a new research facility.

“ARM ‘s business model is excellent. We will maintain the open licensing model and customer neutrality, serving customers in any industry, worldwide and further expanding ARM [intellectual property] license portfolio, “Huang wrote.

The deal is likely to come under scrutiny in the UK, where some politicians are worried about retaining jobs at ARM. Nvidia rivals – who buy chip designs from ARM – are also likely to oppose it.

The prime minister’s spokesman said on Monday that the British government would not hesitate to investigate any takeover that could have a significant impact on the country.

Another sale of assets for SoftBank

The deal comes four years after SoftBank bought ARM for $ 32 billion, marking the largest foreign acquisition by a Japanese company at the time.
SoftBank has been working to sell assets in recent months as the group appears to be raising cash in response to the coronavirus pandemic. In March, he announced a plan for sell $ 41 billion value of assets and last month doubled with a partial sale of its stake in the Japanese mobile phone company.
SoftBank shares in Tokyo rose almost 9% on Monday after the news. The Financial Times It also said Monday that SoftBank is reviewing a privatization plan for the company. SoftBank declined to comment on the report.

“The combination is likely to raise SoftBank’s share price in Tokyo,” Jeffrey Halley, senior market analyst for Asia Pacific in Oanda, wrote in a note to clients.

If ARM passes, it will be the largest semiconductor industry deal, surpassing Avago acquisition of Broadcom in 2015, according to Dilogogic.

Under the deal, Nvidia will pay about $ 12 billion in cash and $ 21.5 billion in stock. SoftBank will receive a less than 10% stake in Nvidia and the Japanese company will also be eligible to pay up to $ 5 billion if ARM meets “specific financial performance targets,” according to SoftBank. The company did not disclose the goals.

The agreement is expected to be completed within 18 months. It must first pass regulatory approvals from the United Kingdom, the European Union, the United States and China.

– Luke McGee and Charles Riley contributed to this report.

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