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September 15, 2020

Nvidia acquires UK chip specialist

Nvidia Corp has announced a definitive agreement to acquire Arm Limited, a UK-based provider of processor IP and software design and development solutions, from SBG and the SoftBank Vision Fund in a transaction valued at USD40 billion.

By Sam Duke

Nvidia Corp has announced a definitive agreement to acquire Arm Limited, a UK-based provider of processor IP and software design and development solutions, from SBG and the SoftBank Vision Fund in a transaction valued at USD40 billion.

Nvidia says the combination brings together Nvidia’s leading AI computing platform with Arm’s ‘vast ecosystem’ to create the premier computing company for the age of artificial intelligence.

SoftBank will remain committed to Arm’s long-term success through its ownership stake in Nvidia, expected to be under 10 percent.

“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.

“Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world. Uniting 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 tremendous benefits for both companies, our customers, and the industry. For Arm’s ecosystem, the combination will turbocharge 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 site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. 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.”

Under the terms of the transaction, which has been approved by the boards of directors of Nvidia, SBG and Arm, Nvidia will pay to SoftBank a total of USD21.5 billion in Nvidia common stock and USD12 billion in cash, which includes USD2 billion payable at signing. The number of Nvidia shares to be issued at closing is 44.3 million, determined using the average closing price of Nvidia common stock for the last 30 trading days. Additionally, SoftBank may receive up to USD5 billion in cash or common stock under an earn-out construct, subject to satisfaction of specific financial performance targets by Arm.

Nvidia will also issue USD1.5 billion in equity to Arm employees.

Following the closing of the transaction, Nvidia intends to retain the name and strong brand identity of Arm and expand its base in Cambridge. Arm’s intellectual property will remain registered in the UK.

As part of Nvidia, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success, with 180 billion chips shipped to-date by its licensees. Arm partners will also benefit from both companies’ offerings, including Nvidia’s numerous innovations.

Nvidia intends to finance the cash portion of the transaction with balance sheet cash. The transaction does not include Arm’s IoT Services Group.

The proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals for the UK, China, the European Union and the United States. Completion of the transaction is expected to take place in approximately 18 months.

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