After weeks of speculation, Nvidia has announced it plans to buy the chip giant, Arms Holdings, in a $40 billion deal from the present owner SoftBank. The boards of the three parties have accepted the outline of the deal.
According to the deal, SoftBank will receive $10 billion in cash and get a $21.5 billion stock in Nvidia. The stake will be just a bit less than 10% of the company. Moreover, SoftBank is expected to earn $5 billion. Conditions and timings of the deal haven’t been announced yet.
The $40 billion prices also include $1.5 billion in compensation for the Arm employees, which are more than 6000. So in total, SoftBank will get $38.5 billion through the deal.
Nvidia has decided to buy all of Arm’s product groups except the Internet of Things division. It is one of the areas in which Arm has expanded in recent years to grow outside its chips business.
Due to the complexities and multiple countries involved, the deal will take one and a half years to complete. Moreover, it would require antitrust and regulatory approvals in the United Kingdom and the U.S., China, and the European Union.
According to Nvidia, it plans to double down on the United Kingdom as its core engineering efforts. This move will lessen the concerns from Downing Street about the competitiveness of the British economy in the tech services, after the departure of the company from the EU. The UK will complete Brexit later this year. However, the ongoing pandemic may extend this deadline.
The deal will prove helpful for SoftBank as it will provide it with immediate cash relief. The firm has been trying to keep its head above the water after several losses. Moreover, SoftBank will return as a major investor in the Nvidia stocks. Previously, the firm had a 4.9% stake in Nvidia.
