On August 4th, according tomedia reports, people familiar with the matter said that Nvito, which is interested in acquiring SoftBank’s chip designer ARM, is in advanced talks with SoftBank over a deal worth more than $32 billion, but in subsequent reports,media also mentioned that softbank wants to retain a stake in ARM, both in the sale and in the IPO.
A full acquisition of ARM would be the largest acquisition by Nvito c. it since its inception and one of the largest in the chip sector.
Nvito’s latest big acquisition, the $7bn acquisition of Mellanox, was announced on March 11 last year and was officially completed on April 27th for more than a year.
Unlike the all-cash acquisition of Myleros Technologies, it would be difficult for Nvito to buy ARM in an all-cash manner, and Nvito’s current cash reserves would not be able to complete such a large-volume all-cash acquisition.
Nvito’s first-quarter financial results for fiscal 2021, released on May 21, showed that at the end of the quarter ended April 26, their cash reserves were $16.354 billion, half the amount SoftBank bought ARM in 2016. Even if the second quarter can achieve more than $1 billion in net profit, there is still a small gap, if the all-cash approach to buy, it will need to borrow and other ways to raise more than $16 billion.
In the absence of cash reserves to support all-cash acquisitions, Nvito’s acquisition of ARM is more likely to be done in cash-plus shares, a common way to buy.
Notably, sources who did not want to give said softbank could acquire Nvito shares after the sale of ARM, when it was reported that softbank wanted to take a stake in ARM.
Media reported that SoftBank and Nvida are still in talks to buy ARM, the final acquisition agreement is not yet known, if an agreement, the acquisition will be revealed.