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Given that NVidia can already license designs from ARM and given that companies will trust ARM less in rival NVidia's hands then in a neutral party it looks lik
by Symmetry 6y ago
Given that NVidia can already license designs from ARM and given that companies will trust ARM less in rival NVidia's hands then in a neutral party it looks like the value of ARM is going to go way down after the sale, effectively lighting a giant pile of millions of dollars of economic value on fire. But the literature says that that's actually pretty typical of how mergers and acquisitions end up playing out. In general they're tributes to the CEO's ego that impoverish shareholders, though there are exceptions. I can't help but think that NVidia is paying $40B for a company that'll be worth $15B to them but would be worth $30B on the open market.
- aaronblohowiak 6y agofor the arm unit itself, i agree. but what about the threat that arm poses to the rest of their business? "acquisitions diminish value of thing being acquired" may generally be true but "acquisitions can be a way to stave off a threat" i believe may also be true, though to your larger point this may lead to less value in the market overall.
- fluffy87 6y agoWhich threat? NVIDIA already licenses and sells arm cores. Arm is already part of their products.
- aaronblohowiak 6y agoIf they start restricting arm licenses or attaching other requirements to the license...
- pavlov 6y agoThe actual value produced by ARM may go down, but the merger can be very effective in helping prop up NVidia's stock price. The company is valued at $300 billion currently. The ARM deal will apparently be paid mostly in stock, making Softbank NVidia's largest shareholder. If they succeed in creating the perception among investors that NVidia controls the ARM market, the share price increase would dwarf a $15B loss in the value of the ARM unit itself.