One would be making the argument, "the cost is essentially free because although we spent $40B, we acquired a company worth $40B". Obviously, that's not any more correct than the case of paying in stock.
If they gave away cash, that's a different story, it all depends.. if they were sitting on $1tn cash, and the spent $40bn, that's no biggie. I mean we went through COVID, what worse can come next?
Well, you’re now getting 50% of the dividend produced by the new combined entity. If the deal was correctly priced, your share of the Arm dividend should exactly replace the portion of your Nvidia dividend that you lost through dilution.
Nvidia is essentially telling us that they think their shares are currently richly valued. I agree with that.
They could also think their shares are valued accurately but believe the benefits of synthesis would increase the value.
https://www.marketwatch.com/investing/stock/nvda/financials/...
Their only other option would be taking on debt.
That's telling us something about what they think about their share valuation right now.
All it tells you is that they think it's preferable to taking on debt, which in some sense is the position you always start from. Debt has a deadweight cost that you have to overcome.
But we can test your theory. You're saying they thought their shares were overvalued. The market's reaction was the opposite - announcing the deal bumped their share price 7.5%.