It is now official that NVIDIA is acquiring Arm from SoftBank– a Japanese multinational conglomerate holding company. Arm is a British semiconductor and software design company and it is expected to be one of the biggest tech mergers and acquisitions of this decade and here is why.
This is a huge deal, involving $40 billion. This is an immediate accretive deal involving NVIDIA’s non-GAAP gross margin and non-GAAP earnings per share. Moving forward with this partnership, these brands will work on an AI computing platform to create products for the modern tech era.
NVIDIA will pay to SoftBank a total of $21.5 billion in NVIDIA common stock and $12 billion in cash. At the time of signing, NVIDIA will pay $2 billion and SoftBank will get 44.3 million NVIDIA shares. On top of that, Softbank might receive up to $5 billion in cash or common stock under an earn-out construct, depending on the specific financial performance targets by Arm.
Lastly, NVIDIA will pay 1.5 billion in equity to Arm employees. According to the press release, it might take up to 18 months for the completion of the transaction including the receipt of regulatory approvals for the U.K., China, the European Union, and the United States.
With this deal, SoftBank will get a stake in NVIDIA which is expected to be less than 10 percent. According to Jensen Huang, founder, and CEO of NVIDIA, AI is the most powerful technology that can power a new series of computing. In the coming days, more than a trillion of computing devices will be powered by AI, and this partnership is positioned for the age of AI.
The upcoming solutions from NVIDIA and Arm will power a range of devices, including cloud, smartphones, PCs, self-driving cars, and robotics. He also said that the partnership will have mutual benefits, where Arm’s R&D will get a turbocharge and it can also expand the portfolio with NVIDIA’s GPU and AI technology.
NVIDIA has confirmed that Arm will continue to operate in the open license model. The technology developed by Arm is currently powering 180 billion chips and this number is going to multiply in the coming days.
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