The rumor had been going around for a few weeks already. On Monday September 14, the Japanese SoftBank Group announced the sale for a maximum of $ 40 billion (33.7 billion euros) of its British subsidiary Arm, a world giant of microprocessors, to the American Nvidia, champion of graphics cards. This acquisition is expected to be completed by March 2022, subject to the approval of numerous regulatory authorities around the world. Nvidia will pay more than half ($ 21.5 billion – 17.7 billion euros) with its own shares.
The price of $ 40 billion is a maximum amount, as the payment of a tranche of $ 5 billion (4.2 billion euros), payable either in cash or in Nvidia shares, will be conditioned “The achievement by Arm of specific financial performance objectives”, said the American group. SoftBank Group is expected to retain between 6.7% and 8.1% of Nvidia's share capital following the transaction.
It’s one of the biggest global mergers and acquisitions announced since the start of the year, and promises to make Nvidia a behemoth in the semiconductor industry.
Arm omnipresent in smartphones
Founded in 1990 in England, Arm is a microprocessor specialist with an overwhelming global market share in smartphones. Its chips, manufactured under license, are also found in countless sensors, connected objects and cloud (remote computing).
SoftBank Group bought 100% of Arm in 2016 for about $ 31 billion (26.1 billion euros). He was initially planning to take Arm back to the stock market, but said on Monday that the deal with Nvidia should allow “To better materialize Arm's potential”, while creating more value for its own shareholders.
Nvidia, whose graphics cards are particularly widely used by the video game industry, has seen sales soar since the coronavirus crisis. Its products are also increasingly present in artificial intelligence and data centers.
Strategic shift for Softbank
SoftBank Group stock, which suffered greatly last week, jumped 10.25% to 6,461 yen around 6:15 a.m. on the Tokyo Stock Exchange. Its take-off is also linked to speculation in the press, according to which SoftBank Group is considering buying back all of its outstanding shares and thus leaving the Tokyo Stock Exchange.
Exiting the listing would offer fewer constraints to the group in terms of the transparency of its accounts, while it is in the process of evolving more and more towards a pure investment company. But a new strategic shift of SoftBank Group also worries its shareholders: rather than focusing mainly on start-ups, the group is now investing in technological champions already listed on the stock market.