Nvidia seems to be in ‘advanced discussions’ to buy Arm from SBG, which bought the company in 2016 for $ 32 bn. This could become the largest deal ever in a consolidating semiconductor indutry…
- Currently, Nvidia seems to be the sole company in advandced talks with SBG
- A potential deal would likely trigger serious regulatory scrutiny, and
- face serious oppositions from Arm’s clients using its technology being potential competitors of Nvidia
Opinion: Currently, Arm is not very profitable, because they invest heavily in R&D (SBG’s strategy) and thus setting the company up for participating in an exponential mega-trend for global chips in the everything-connected world. The third point indicates, that monetization potential is huge, though. Selling Arm to Nvidia would likely realize enormous potential hidden reserves, since it is accounted for at costs at SBG’s balance sheet and comparable peers show stellar performe since 2016 (SOX +227% since Jan 2016, more here). I believe a partial IPO might be a viable (and preferable) option for SBG (shareholders).