NVIDIA agreed to acquire SoftBank Group Corp. its chip division Arm Ltd. for $ 40 billion, and took control of some of the most widely used electronics technology in the semiconductor industry’s largest deal ever.
Ian King for Bloomberg:
Nvidia will pay $ 21.5 billion in stock and $ 12 billion in cash for the British-based chip designer, including a $ 2 billion payment at signing. SoftBank could receive an additional $ 5 billion in cash or shares if Arm’s performance meets certain targets, the companies said in a statement on Sunday. An additional $ 1.5 billion will be paid to Arm employees in the Nvidia share.
“It is a company with a reach that is unlike any other company in the history of technology,” said Nvidia CEO Jensen Huang in an interview. “We combine Nvidia’s leading AI computing with Arm’s vast ecosystem.”
The acquisition is driven by the station to bring artificial intelligence to everything that has on-switch, said the CEO. After successfully selling Nvidia’s graphics chips to data center owners to speed up image recognition and language processing, Huang wants to make sure his technology helps spread it to everything from self-driving cars to smart meters.
Regulatory approvals can be challenging. The companies said that login is required from China, the UK, the EU and US authorities, and it can take as long as 18 months. China’s approval could be particularly difficult given rising tensions with the United States
Another major concern is whether the acquisition will disrupt Arm’s relationship with customers such as Apple … Huang said he wants to maintain Arm’s neutrality and wants to expand the customer list. He claimed that Nvidia spends a lot of money on the acquisition and has no incentive to do something that could lead to customers passing away.
MacDailyNews Take: This is a long way from being a final agreement, as the government approvals are many.
Here is NVIDIA’s press release verbatim:
NVIDIA Acquires $ 40 Billion Armor, Creating the World’s Leading Data Processing Company for Aged AI
Sunday, September 13, 2020
• NVIDIA raises $ 40 billion arm, creating the world’s leading data processing company for the elderly AI
• Unites NVIDIA’s leadership in artificial intelligence with Arms’ vast data ecosystem to drive innovation for all customers
• 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 superbreaking research
• NVIDIA will continue Arm’s open licensing model and customer neutrality and expand Arm’s IP license portfolio with NVIDIA technology
• Immediately satisfactory NVIDIA’s non-GAAP gross margin and EPS
$ 40 billion consideration to be met through a combination of NVIDIA shares and cash
NVIDIA and SoftBank Group Corp. (SBG) today announced a final agreement in which NVIDIA will acquire Arm Limited from SBG and SoftBank Vision Fund (together, “SoftBank”) in a transaction valued at $ 40 billion. The transaction is expected to be immediately satisfactory for NVIDIA’s non-GAAP gross margin and non-GAAP earnings per share.
The combination brings together NVIDIA’s leading AI computing platform with Arms’ vast ecosystem to create the premier computing company for an age of artificial intelligence, accelerating innovation while expanding into large, high-growth markets. SoftBank will remain committed to Arm’s long-term success through its stake in NVIDIA, which is expected to be below 10 percent.
“AI is the most powerful technology of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA. In the years to come, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-humans. Our combination will create a company that is fantastically positioned for the AI age.
“Simon Segars and his team at Arm have built an extraordinary company that contributes to almost every technology market in the world. By combining 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 enormous benefits for both companies, our customers and the industry. For Arm’s ecosystem, the combination will combine 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 website and build a world-class AI research facility, which supports developments in healthcare, life sciences, robotics, self-driving cars and other fields. And to attract researchers and researchers from the UK and around the world to perform 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. ”
“NVIDIA is the perfect partner for Arm,” said Masayoshi Son, Chairman and CEO of SBG. “Since we acquired Arm, we have respected our commitments and invested heavily in people, technology and R&D, thus expanding our business to new areas with high growth potential. Teaming up 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 UK ahead of some of the most exciting technological innovations of our time, which is why SoftBank is pleased 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. ”
“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,” said 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 progress and create new solutions that will enable a global ecosystem of innovators. My management team and I are excited to join NVIDIA so we can write this next chapter together. ”
Commitment to Arm and the UK
As part of NVIDIA, Arm will continue to operate its open licensing model while maintaining the global customer neutrality that has been fundamental to its success, with 180 billion chips sent to date by licensees. Arm Partners will also benefit from both companies’ offerings, including NVIDIA’s many innovations.
SoftBank and Arm are committed to meeting the commitments SoftBank made when it acquired Arm in 2016, which is scheduled to be completed in September 2021. Following the completion of the transaction, NVIDIA intends to retain Arm’s name and strong brand identity and expand its Cambridge base. Arm’s intellectual property rights will remain registered in the United Kingdom
NVIDIA will build on Arms’ R&D presence in the UK and establish a new global center of expertise in AI research at the Arms Cambridge campus. NVIDIA will invest in a state-of-the-art, arm-powered AI supercomputer, developer training facilities and a start-up incubator, which will attract world-class research talent and create a platform for innovation and industry partnerships in fields such as healthcare, robotics and self-driving cars.
Additional transaction details
Under the terms of the transaction, which have been approved by the boards of NVIDIA, SBG and Arm, NVIDIA will pay SoftBank a total of $ 21.5 billion in NVIDIA shares and $ 12 billion in cash, which includes $ 2 billion to be paid by signing. The number of NVIDIA shares to be issued at closing is 44.3 million, determined using the average closing price of the NVIDIA share over the last 30 trading days. In addition, SoftBank may receive up to $ 5 billion in cash or shares under an earn-out construction, subject to the satisfaction of specific financial performance targets from 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 cash. The transaction does not include Arms IoT Services Group.
The proposed transaction is subject to normal termination conditions, including receipt of regulatory approvals for the United Kingdom, China, the EU and the United States. Completion of the transaction is expected to take place in 18 months.
Source: NVIDIA Corporation