Nvidia Confirms $40B Cash, Stock Deal To Acquire SoftBank Chipmaker Arm

Nvidia Corporation NVDA announced Sunday it was acquiring British chipmaker Arm Ltd from SoftBank Group Corp’s SFTBY Vision Fund, in a transaction valued at $40 billion.

What Happened: Under the deal, the Santa Clara, California-based company will fund the purchase of all of Arm’s shares in $12 billion cash and $21.5 billion in stock. $2 billion in cash would be payable at signing of the agreement, Nvidia said in a statement.

The chipmaker will also issue $1.5 billion in equity to Arm employees and intends to keep the acquired company’s headquarters in Cambridge, United Kingdom.

“Uniting NVIDIA's [artificial intelligence] 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,” Nvidia CEO Jensen Huang said. 

SoftBank CEO Masayoshi Son called Nvidia “the perfect partner for Arm.”

Why It Matters: Nvidia said it intends to finance the cash part of the transaction with balance sheet cash and will not acquire Arm’s IoT Services Group.

Last month, Arm had canceled plans to spin off its two Internet of Things units to SoftBank, according to the Wall Street Journal.

The semiconductor deal is one of the largest ever and comes months after Analog Devices Inc ADI purchased analog integrated circuit company Maxim Integrated for $22 billion.

Arm’s chips are used in smartphones but will also be used in the future models of Apple Inc's AAPL Mac range of computers, which are moving away from Intel Corporation INTC-made chips.

Price Action: Nvidia shares closed 1.2% lower at $486.58 on Friday and declined 0.3% in the after-hours session. SoftBank OTC shares closed 2.12% higher at $27.50 on the same day.