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Nvidia to takeover Arm Holdings

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
Nvidia secures its spot in the AI sector

After the long-awaited outcome for the agreement between TikTok and the Oracle, the new week brought into attention another deal.

One of the world's largest chip manufacturers, Nvidia, closed a deal with the Japanese SoftBank. The former bought from the latter a UK-based company specialized in chip manufacturing – Arm Holdings.

Arm Holdings will be sold for a mix of cash and stocks: Nvidia will pay $21.5 billion in stocks and $12 billion in cash. Under the deal, SoftBank could receive roughly $5 billion in cash or stock, if Arm is reaching its financial targets. Moreover, Arm’s employees are to receive $1.5 billion worth of Nvidia stocks.

Until now, this deal is the largest takeover in this industry. It is not only a gain for Nvidia, as it can expand its business in the microprocessors sector but also for SoftBank from a financial point of view – as the overall money that it will receive from Nvidia will top $40 billion, more than what it paid in 2016 when it bought the company. 

Nvidia plans to leave Arm headquarters in Cambridge, UK, but is looking to expand the AI research facility, focusing on developments in healthcare, life sciences, self-driving cars, robotics, and so on.

The deal is now undergoing regulatory processes, and it is expected to close in the next 18 months.

Following the news, during the American trading session Nvidia is trading 7.50% higher, while SoftBank is getting closer to 10%. 

Read all about the deal between TikTok and Oracle on CAPEX.com!

Sources: marketwatch.com, bbc.com, finance.yahoo.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.