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SoftBank will sell UK Arm Holdings to US chip company Nvidia for more than $ 40 billion, just four years after founder Masayoshi Son bought the chip designer and said it would be the hub of the Japanese tech group’s future.
Several people with direct knowledge of the matter said that a cash-and-share acquisition of Arm by Nvidia could be announced on Monday, with SoftBank becoming the largest shareholder in the US chip company.
The announcement of the deal depended on SoftBank ending a complicated dispute between Arm and the head of their China joint venture, Allen Wu, who previously rejected an attempt to oust him and claimed legal control of the unit.
Several people close to SoftBank said the matter was now “resolved,” although a person close to Wu said that “he is still the chairman of Arm China.” A spokesman for Wu declined to comment.
The acquisition values Arm above the $ 32 billion price SoftBank paid for the business in 2016, a deal that came weeks after the UK voted to leave the European Union and prompted critics, including Arm’s founder, they will accuse the country of selling the crown jewel. your technology sector.
While Nvidia is paying more for the asset than SoftBank, the price also reflects the scale of Arm’s poor performance under the ownership of the Japanese group.
Nvidia had a market valuation roughly similar to Arm’s at the time of the 2016 deal, but is now trading with a market value of $ 300 billion, or roughly 10 times the amount SoftBank paid in cash for Arm. By paying for a large portion of transactions with your own shares, you also pass part of the transaction risk to SoftBank.
For Nvidia, which recently surpassed Intel to become the world’s most valuable chipmaker, the deal will further cement the US company’s position at the center of the semiconductor industry. The British chip designer’s technology is beginning to find wider applications beyond mobile devices, in data centers and personal computers, including Apple’s Macs.
Arm would transform Nvidia’s product line, which until now has largely focused on the high-end of the chip market. Its powerful graphics processors, which are designed to handle focused and data-intensive tasks, are typically sold to PC gamers, scientific researchers, and AI and autonomous car developers, as well as cryptocurrency miners.
To pave the way for the deal, SoftBank reversed an earlier decision to delist an Internet of Things business from Arm and transfer it to a new company under its control. That would have stripped Arm of what was meant to be the high-growth engine that would propel it into a 5G-connected future. One person said SoftBank made the decision because it would have put it in conflict with commitments made to the UK on Arm, which were agreed at the time of the 2016 agreement to appease the government.
SoftBank’s Vision Fund previously held a stake in Nvidia, in a rare, publicly traded investment for the $ 100 billion fund that focuses on private tech companies, but dumped all of its shares early last year. . Akshay Naheta, the 39-year-old SoftBank executive who spearheaded that investment, has also been heavily involved in negotiations between the Japanese conglomerate and Nvidia.
The Vision Fund, which is run by Naheta’s close ally and former Deutsche Bank colleague Rajeev Misra, controls a 25 percent stake in Arm and will be compensated as part of the deal, another person added.
A person close to the talks said that Nvidia would make commitments to the UK government about Arm’s future in Britain, where opposition politicians have recently insisted that any potential deal must safeguard British jobs.
The Wall Street Journal previously reported on the imminent announcement of the deal.
Additional information from Ryan McMorrow in Beijing
