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$40 billion to sell arm? It is said that NVIDIA will soon reach an acquisition agreement with Softbank

According to informed sources, Japan's Softbank Group is about to reach an agreement with the US chip giant Nvidia to sell its British chip design subsidiary Arm to the latter for more than US$40 billion.

People familiar with the matter said that the cash and stock transaction under discussion will value Arm at around $40 billion. For SoftBank, the terms of sale under discussion will represent a huge victory. Four years ago, Softbank spent 32 billion US dollars to acquire Arm, but it has been difficult to promote the rapid growth of the business.


People familiar with the matter said that Arm and Nvidia have been in exclusive negotiations for several weeks. Initially, there were rumors that SoftBank sold Arm or conducted an initial public offering in July, and then later this month, the two companies entered "in-depth negotiations", which is clearly close to reaching an agreement.

The deal may be finalized early next week, provided that the deal will not break at the last minute. The microprocessor designed by Arm provides support for most smartphones in the world. By joining forces with Nvidia, the combined company will become a giant in the chip industry.

Nvidia is a fast-growing chip industry player whose chips are used in intensive computing to run graphics and play a key role in video games, cloud computing and other activities that stimulate demand during the COVID-19 pandemic. This has allowed its stock price to rise by more than 100% this year, making it the best-performing stock in the S&P 500 Index.

If Nvidia acquires Arm successfully, it will be one of the largest M&A transactions this year, and it may also be the largest semiconductor transaction in history. Although the business interruption caused by the epidemic has weakened global transaction volumes, as chip manufacturers seek to expand their scale and product portfolio to support more and more daily necessities connected to the Internet, the pace of integration in the semiconductor industry is getting faster and faster. Another large-scale transaction this year is the acquisition of Maxim Integrated Products Company by chip manufacturer Analog Devices for $22 billion.

Nvidia's acquisition of Arm will enable the graphics chip manufacturer to obtain more patents and intellectual property rights to enhance its products and give it more opportunities to enter the processor sales field more deeply.

However, this transaction may encounter regulatory obstacles and may be resisted by Arm customers, including major chip manufacturers and electronic product manufacturers such as Intel, Samsung, and Apple.

Earlier reports said that SoftBank is exploring options for dealing with Arm, including selling it in whole or in part, or conducting an initial public offering (IPO). Arm has stated that it plans to transfer the two IoT service divisions to new entities, which will be owned and operated by SoftBank as part of an initiative to focus on its core semiconductor IP business. The company later changed this idea and said it would keep the business internal.

As far as SoftBank is concerned, the group has always been under pressure to support its sluggish stock price and has pledged to sell approximately $40 billion in assets. So far, most of its asset sale plans are ongoing or completed, and its stock price has risen by more than 20% this year. The assets sold include a large number of holdings in Alibaba and wireless operator T-Mobile US, which has completed the merger with Sprint.

SoftBank also bought options related to personal technology stocks worth about $50 billion this year. It is reported that the huge scale of this bet has a positive impact on the entire stock market, pushing up stock prices.

At SoftBank, its CEO Masayoshi Son is always negotiating with a small team about the Arm transaction, including Arm CEO Simon Segars, CFO Yoshimitsu Yoshimitsu Goto, Vision Fund CEO Rajeev Misra and another SoftBank executive, Akshay Naheta. (Little)

Source: NetEase Technology Report, translated by Google Translate


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