NVIDIA and SoftBank Group Corp. (SBG) say they have agreed to a sale that will see NVIDIA buy processor design company Arm Ltd. from SBG and the SoftBank Vision Fund. The cash and stock transaction has a value of $40 billion. The deal, which does not include Arm’s IoT Services Group, is expected to close in 18 months.
NVIDIA will pay $21.5 billion in common stock and $12 billion in cash, which includes $2 billion payable at signing, to buy Arm. At total of 44.3 million NVIDIA shares will be issued at closing, determined using the average closing price of NVIDIA common stock for the last 30 trading days. SoftBank also may receive up to $5 billion in cash or common stock under an earn-out construct. NVIDIA says it also will issue $1.5 billion in equity to Arm employees. NVIDIA states it plans to use balance sheet cash for the rest of the purchase price. SoftBank will own less than 10% of the combined company at the conclusion of the deal.
NVIDIA expects the combination of its artificial intelligence (AI) expertise and Arm’s design ecosystem to create an AI and computing powerhouse. “AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA. “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.”
“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,” added Simon Segars, CEO of Arm. “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.”
NVIDIA will continue Arm’s open-licensing model and customer neutrality and expand Arm’s IP licensing portfolio with NVIDIA technology. The company adds that it also is committed to expanding Arm’s presence in the UK. “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,” stated Huang. “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.”
The sale is subject to customary closing conditions, including the receipt of regulatory approvals for the UK, China, the European Union, and the U.S.
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