NVIDIA (Nasdaq: NVDA) has agreed to acquire U.K.-based semiconductor company Arm from SoftBank Group and SoftBank Vision Fund for approximately $40B in a push to expand its artificial intelligence computing capabilities.
NVIDIA said Sunday it will pay $12B in cash and $21.5B in common stock to SoftBank under the deal that is expected to close in about 18 months, subject to regulatory approvals in the U.S., U.K., European Union and China and other customary closing conditions.
Under the transaction, NVIDIA will also issue an equity payment worth $1.5B to Arm employees and may pay up to $5B in common stock or cash through an earn-out construct, subject to Arm’s satisfaction of financial performance targets.
Jensen Huang, founder and CEO of NVIDIA, said the combination seeks to establish a computing company positioned for the age of AI.
“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,” Huang added.
Huang noted that Arm’s headquarters will continue to be based in Cambridge, England, and NVIDIA will establish an AI research facility at the Cambridge campus and will use Arm-built CPUs to build an AI supercomputer.
Arm CEO Simon Segars and his management team will join NVIDIA. NVIDIA plans to use balance sheet cash to fund the cash portion of the deal, which does not include the IoT services group of Arm, which will maintain its open-licensing model and global customer neutrality.
The boards of directors from NVIDIA, Arm and SBG approved the acquisition, which is expected to be accretive to NVIDIA’s non-GAAP earnings per share and non-GAAP gross margin.