Nvidia reportedly to acquire ARM Holdings from SoftBank for $40 billion

Enlarge / Components manufactured by ARM Holdings Plc sit inside a demonstration ARMmbed parking meter on display on the second day of Mobile World Congress (MWC) in Barcelona, Spain, on Tuesday, Feb. 28, 2017. A theme this year at the industry's annual get-together, which runs through March 2, is the Internet of Things. Photographer: Pau Barrena/Bloomberg via Getty ImagesBloomberg | Getty Images

SoftBank is set to sell the UKs Arm Holdings to US chip company Nvidia for more than $40 billion, just four years after its founder Masayoshi Son bought the chip designer and said it would be the linchpin for the future of the Japanese technology group.

Multiple people with direct knowledge of the matter said a cash-and-stock takeover of Arm by Nvidia may be announced as soon as Monday, and that SoftBank will become the largest shareholder in the US chip company.

The announcement of the deal hinged on SoftBank ending a messy dispute between Arm and the head of its China joint venture, Allen Wu, who earlier rebuffed an attempt to remove him and claimed legal control of the unit.

Several people close to SoftBank said the matter was now “resolved,” though one person close to Mr Wu said he “remains the chairman of Arm China.” A spokesperson for Mr Wu declined to comment.

The takeover values Arm above the $32 billion price that SoftBank paid for the business in 2016, a deal that was struck weeks after the UK voted to leave the European Union and prompted critics including Arms founder to accuse the country of selling off the crown jewel of its tech sector.

While Nvidia is paying more for the asset than SoftBank did, the price also reflects the scale of Arms underperformance under the Japanese groups ownership.

Nvidia had a market valuation of roughly similar to that of Arms at the time of the 2016 deal, but now trades 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 the deals with its own shares, it is also passing part of the risk of the transaction to SoftBank.

For Nvidia, which recently overtook Intel to become the worlds most valuable chipmaker, the deal will further consolidate the US companys position at the centre of the semiconductor industry. The British chip designers technology is starting to find broader applications beyond mobile devices, in data centres and personal computers including Apples Macs.

Arm would transform Nvidias product line-up, which until now has largely focused on the high end of the chips market. Its powerful graphics processors—which are designed to handle focused, data-intensive tasks—are typically sold to PC gamers, scientific researchers and developers of artificial intelligence and self-driving cars, as well as cryptocurrency miners.

To pave the way for the deal, SoftBank reversed an earlier decision to strip out 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 power it into a 5G-connected future. One person said that SoftBank made the decision because it would have put it in conflict with commitRead More – Source