The Japanese SoftBank Group announced on Monday the sale for 40 billion dollars of its British subsidiary Arm, a world giant of microprocessors, to the American Nvidia, champion of graphics cards, without raising questions about the evolution of its business model .
This mega-acquisition is expected to be finalized by March 2022, subject to the approval of numerous regulatory authorities around the world.
Nvidia will pay more than half ($ 21.5 billion) with its own shares.
The price of $ 40 billion is a maximum amount because the payment of a tranche of $ 5 billion, payable either in cash or in Nvidia shares, will be conditioned "on the achievement by Arm of specific financial performance objectives" .
SoftBank Group is expected to own between 6.7% and 8.1% of Nvidia's capital after the transaction.
It is one of the largest global mergers and acquisitions announced since the beginning of the year, and which promises to make Nvidia a juggernaut in the semiconductor industry.
Founded in 1990 in England, Arm is a microprocessor specialist with an overwhelming global market share in smartphones.
But its chips, manufactured under license, are also found in countless sensors, connected objects and cloud services (remote computing).
Nvidia, whose graphics cards are particularly widely used by the video game industry, has seen its sales skyrocket since the coronavirus crisis.
Its products are also increasingly present in artificial intelligence and data centers.
- "Maintain the neutrality" of Arm -
SoftBank Group bought Arm in 2016 for around $ 31 billion.
He initially planned to take the company back to the stock market, but said on Monday that the deal with Nvidia should "better realize Arm's potential."
"Arm has underperformed" under the leadership of SoftBank Group, Amir Anvarzadeh, strategist at Asymmetric Advisors based in Singapore, told AFP on Monday.
The sale to Nvidia "will raise eyebrows" to major global semiconductor players, because their partnerships with Arm could now be compromised, the American group being one of their competitors.
"They will need guarantees," said Anvarzadeh.
"We will maintain the neutrality" of Arm vis-à-vis its customers as well as its open license model, promised Nvidia boss Jensen Huang in a letter to his employees posted on the group's website.
He also announced that Arm's headquarters would remain in Cambridge (England), where Nvidia also plans to set up a global research center in artificial intelligence.
The SoftBank Group action, which had suffered greatly last week, took off Monday on the Tokyo Stock Exchange to end up 8.95% to 6,385 yen.
Its take-off has also been linked to speculation in the press that SoftBank Group is considering buying back all of its outstanding shares and thus leaving the Tokyo Stock Exchange, reviving an old project.
Exiting the listing would offer fewer constraints to the group in terms of transparency of its accounts, while it is in the process of evolving more and more towards a pure investment company.
- "Speculator" without genius -
SoftBank Group initiated a mega-program of asset sales this year to strengthen its liquidity and finance huge buybacks of its own shares.
It has significantly reduced its presence in telecoms, having sold significant stakes of its shares in T-Mobile US and SoftBank Corp, its Japanese mobile telephone subsidiary.
He also monetized part of his shares in Chinese e-commerce giant Alibaba, using them as collateral to borrow.
But a new strategic shift by SoftBank Group worries its shareholders: rather than focusing mainly on start-ups, the group is now investing in technological champions already listed on the stock exchange.
SoftBank Group would have invested tens of billions of dollars in American technology stocks in the form of equity derivatives, which would have influenced the surge of the Nasdaq index this summer, according to several media.
The decline of the Nasdaq since early September has cast doubt on the merits of such a bet, especially as the Japanese group remains silent for the moment on its recent stock market operations.
Masayoshi Son, the iconic CEO of SoftBank Group, "is not a genius, but a speculator" who has lost much of his credibility after a series of bitter failures, according to Anvarzadeh.
"When there is a tech bubble, it's never very far."
© 2020 AFP