Microsoft Has Acquisition Deal with Nvidia | Hacker News Reader

Microsoft Has Acquisition Deal with Nvidia

osnews.com

41 pointswslh9 comments

Not an acquisition deal as in "signing the contract this week" like with Skype but rather a deal for the opportunity to match an offer in the event that another company wants to acquire Nvidia.

From the article:

The deal gives Microsoft the exclusive right to match any offer for 30% or more of Nvidia's outstanding shares by a third-party." The agreement appears to be over 10 years old, dating back to the time of the contract for the GPU of the original X-Box.

So the "exclusive right" in this case is that Nvidia has to notify MS of any offers and their amount?

Yes and no. Microsoft's right is Nvidia must sell to Microsoft or nobody if Microsoft matches a competing bid for 30% or more of nVidia. A side effect of that is that nVidia has to inform Microsoft of any deals of that size.

This doesn't really do anything other than keep nVidia out of the hands of a competitor. It doesn't sound like this contract really helps if Microsoft wanted to buy nVidia without other buyers involved.

It's a sign of how vulnerable Microsoft is feeling. If Nvidia were purchased by Apple (or even HP, say) then Microsoft might suddenly find itself trying to compete in the mobile market without access to a credible hardware stack.

Not at all. The article says the agreement is over 10 years old, and to me seems to have been a smart move on Microsoft's part.

Basically, they recognized that they were very reliant on NVidia's technology, and while buying from NVidia is cheaper than making it themselves, they mitigated risk of losing that option by giving them the chance to pony up to keep any other company, competitor or not, from changing things.

Would be clever if they could fight off the PS4 using this sort of angle. Too bad that the video hardware industry would collapse to just AMD though.

By mobile, do you mean Win 8 tablets? AMD is claiming their solution will be the fastest x86 Win 8 on a tablet, and Nvidia has nothing to do right now with WP7 devices.

The deal had to do with the original XBox. Nvidia was doing less well at that time catering to enthusiasts and thus if taken over, would pose a big danger to the XBox with all the graphics IP possibly lost to a competitor like Sony and MS having to basically start over again.

I wouldn't call it vulnerability as it seems like a sensible requirement to place on the manufacturer of a critical component to a business you are going to sink millions into. They likely made it part of the original negotiations.

Two questions come to my mind: Is this agreement still valid? And would either MSFT and/or NVDA live up to it in case of a NVDA buyout in the future?

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