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SoftBank Nears $40 Billion Deal to Sell Arm Holdings to Nvidia

F-22Raptor

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SoftBank Group Corp. is nearing a deal to sell British chip designer Arm Holdings to NvidiaCorp. for more than $40 billion, according to people familiar with the matter, the latest in a series of big asset sales by the Japanese technology conglomerate.

The cash-and-stock deal being discussed would value Arm in the low $40 billions, the people said. The terms under discussion would mark a big win for SoftBank, which bought Arm four years ago for $32 billion and had struggled to jump-start growth in the business.


Arm and Nvidia have been in exclusive talks for several weeks and a deal could be sealed early next week, the people said—assuming it isn’t derailed at the last minute.

Arm designs microprocessors that power most of the world’s smartphones. By joining forces with Nvidia, the combined company would be a powerhouse in the chip industry.
Nvidia is a fast-growing industry player whose chips are used to run the intense calculations for graphics—and play a key role in videogaming, cloud-computing and other activities for which the coronavirus pandemichas stoked demand. That has sent its shares up more than 100% this year, making it the best-performing stock in the S&P 500 index.


Should a deal come together, it would be one of the largest transactions so far this year and potentially the largest semiconductor deal ever. Though business disruptions stemming from the pandemic have dented global deal volume, consolidation has kept up pace in the semiconductor industry as chip makers seek scale and expand their product portfolios to support the increasing number of everyday items that are connected to the internet.

Such linkage is commonly referred to as the Internet of Things. Another of the year’s biggest deals was the $22 billion purchase ofMaxim Integrated Products Inc. by fellow chip maker Analog Devices Inc.

A sale to Nvidia could prompt scrutiny from antitrust regulators and potentially pushback from Arm’s customers, which include major chip makers and electronics manufacturers such as Intel Corp., Samsung Electronics Co.and Apple Inc.

The Wall Street Journal reported in July that SoftBank was exploring options for Armincluding a full or partial sale or an IPO. Arm had said it planned to transfer two Internet of Things services units into new entities that would be owned and operated by SoftBank as part of a move to focus on its core semiconductor-IP business. It later reversed course on that move, saying it would instead keep the operations in-house.


SoftBank, for its part, had been under pressure to shore up its flagging stock priceand promised some $40 billion in asset disposals. Most or all of that is already under way or completed and its shares are up more than 20% this year. Among the sales: big chunks of its holdings in China’s Alibaba Group Holding Ltd. and T-Mobile US Inc.following the wireless provider’s merger with Sprint Corp.

SoftBank has also purchased options tied to around $50 billion worth of individual tech stocks this year. The sheer size of the bet has had an outsize effect on the overall stock market, driving prices higher, the Journal has reported.

At SoftBank, Chief Executive Masayoshi Son has been working with a small team to negotiate the Arm deal including the chief executive of the chip company, Simon Segars, Chief Financial Officer Yoshimitsu Goto, as well as Rajeev Misra, CEO of the firm’s giant Vision Fund, and Akshay Naheta, another SoftBank executive.

https://www.wsj.com/articles/softba...o-nvidia-for-more-than-40-billion-11599928360
 

Paul2

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SoftBank Group Corp. is nearing a deal to sell British chip designer Arm Holdings to NvidiaCorp. for more than $40 billion, according to people familiar with the matter, the latest in a series of big asset sales by the Japanese technology conglomerate.

The cash-and-stock deal being discussed would value Arm in the low $40 billions, the people said. The terms under discussion would mark a big win for SoftBank, which bought Arm four years ago for $32 billion and had struggled to jump-start growth in the business.


Arm and Nvidia have been in exclusive talks for several weeks and a deal could be sealed early next week, the people said—assuming it isn’t derailed at the last minute.

Arm designs microprocessors that power most of the world’s smartphones. By joining forces with Nvidia, the combined company would be a powerhouse in the chip industry.
Nvidia is a fast-growing industry player whose chips are used to run the intense calculations for graphics—and play a key role in videogaming, cloud-computing and other activities for which the coronavirus pandemichas stoked demand. That has sent its shares up more than 100% this year, making it the best-performing stock in the S&P 500 index.


Should a deal come together, it would be one of the largest transactions so far this year and potentially the largest semiconductor deal ever. Though business disruptions stemming from the pandemic have dented global deal volume, consolidation has kept up pace in the semiconductor industry as chip makers seek scale and expand their product portfolios to support the increasing number of everyday items that are connected to the internet.

Such linkage is commonly referred to as the Internet of Things. Another of the year’s biggest deals was the $22 billion purchase ofMaxim Integrated Products Inc. by fellow chip maker Analog Devices Inc.

A sale to Nvidia could prompt scrutiny from antitrust regulators and potentially pushback from Arm’s customers, which include major chip makers and electronics manufacturers such as Intel Corp., Samsung Electronics Co.and Apple Inc.

The Wall Street Journal reported in July that SoftBank was exploring options for Armincluding a full or partial sale or an IPO. Arm had said it planned to transfer two Internet of Things services units into new entities that would be owned and operated by SoftBank as part of a move to focus on its core semiconductor-IP business. It later reversed course on that move, saying it would instead keep the operations in-house.


SoftBank, for its part, had been under pressure to shore up its flagging stock priceand promised some $40 billion in asset disposals. Most or all of that is already under way or completed and its shares are up more than 20% this year. Among the sales: big chunks of its holdings in China’s Alibaba Group Holding Ltd. and T-Mobile US Inc.following the wireless provider’s merger with Sprint Corp.

SoftBank has also purchased options tied to around $50 billion worth of individual tech stocks this year. The sheer size of the bet has had an outsize effect on the overall stock market, driving prices higher, the Journal has reported.

At SoftBank, Chief Executive Masayoshi Son has been working with a small team to negotiate the Arm deal including the chief executive of the chip company, Simon Segars, Chief Financial Officer Yoshimitsu Goto, as well as Rajeev Misra, CEO of the firm’s giant Vision Fund, and Akshay Naheta, another SoftBank executive.

https://www.wsj.com/articles/softba...o-nvidia-for-more-than-40-billion-11599928360
Will be interesting to see how the move will fare with faring of ARM China. If readers remember, ARM China has made a castling move of having ARM UK issue it a perpetual license for ARM architecture, and parallel title to all IP.
 

TruthHurtz

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Will be interesting to see how the move will fare with faring of ARM China. If readers remember, ARM China has made a castling move of having ARM UK issue it a perpetual license for ARM architecture, and parallel title to all IP.
Good thing China also has the license to develop MIPS architecture. Alibaba's foray into RISC-V is also promising.

This deal has to pass regulators first and the UK is on edge about its national champion being acquired and potentially used as a geopolitical tool or hurting market share for ARM architecture due to Nvidia's ownership, I think China gets a say too.
 

SuperStar20

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Good thing China also has the license to develop MIPS architecture. Alibaba's foray into RISC-V is also promising.

This deal has to pass regulators first and the UK is on edge about its national champion being acquired and potentially used as a geopolitical tool or hurting market share for ARM architecture due to Nvidia's ownership, I think China gets a say too.
Well, just one tweet from Trump will change everything.
 

Bengal71

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What's interesting is why SoftBank is selling it. Masayohi Son is a wise investor. Maybe he is seeing the future that ARM and other chip designers are screwed in a few years once China designs it's own chips and become a leader or just gets even 1/4th of the market share. So letting go of his investment early?
 

Skull and Bones

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What's interesting is why SoftBank is selling it. Masayohi Son is a wise investor. Maybe he is seeing the future that ARM and other chip designers are screwed in a few years once China designs it's own chips and become a leader or just gets even 1/4th of the market share. So letting go of his investment early?
Not, if you look at his current investments in WeWork, and other startups are unjustified price premiums.
 

Skull and Bones

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Not sure what you mean. What has his investment in WeWork got to do with selling ARM?
Because there is increasing pressure from investors to offload assets to make up for the losses. Soft bank is also putting pressure some of these startups in his portfolio to turn profitable and file for IPO.
 

Bengal71

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Because there is increasing pressure from investors to offload assets to make up for the losses. Soft bank is also putting pressure some of these startups in his portfolio to turn profitable and file for IPO.
ok.

I personally think the american companies will lose their chip dominance in the near future. They will remain big players but Chinese companies will also become big players. Trump overplayed his hand and made a big mistake. We will see what happens in the future.
 

Skull and Bones

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ok.

I personally think the american companies will lose their chip dominance in the near future. They will remain big players but Chinese companies will also become big players. Trump overplayed his hand and made a big mistake. We will see what happens in the future.
Do not disagree with you here, chip manufacturing is becoming less and less profitable in US. Even Intel is contemplating going fabless.
 

Song Hong

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Softbank sometimes act as an investment arm of China. Not long ago, Softbank acquire ARM, and they agreed to transfer part of their IP and activities to China companies.

Later due to US instigation ARM eat their word.

ARM China and ARM UK start fighting.

So Softbank sell ARM to Nvidia.
 

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