NVIDIA and Microsoft Have Agreement to Poison Pill Take Overs of NVIDIA

NVIDIA has a special deal with Microsoft to prevent outside deals and possibly let Microsoft itself buy it out, according to SEC filings. The Windows developer has rights of refusal on any attempt by a company to buy more than 30 percent of NVIDIA’s share, preventing any other company from buying a controlling stake. NVIDIA also has “poison pills” that would let it issue shares without shareholder approval to prevent a controlling stake, and its shareholder voting rules would prevent an activist investor from easily overthrowing management.

The clauses, which extend back by a decade, don’t necessarily amount to a Microsoft takeover but may instead be a buffer to keep NVIDIA independent. It would prevent a deal that would see NVIDIA controlled by a company that might not support Windows or would put tight restrictions on which Windows devices could use it. Intel, for example, could have matched AMD’s buyout of ATI and prevented NVIDIA chips from being used in AMD-based computers.

That the pact is still ongoing would also be a possible deterrent against companies like Apple that might use NVIDIA as a weapon against Microsoft both on desktop and in mobile. It could get a genuinely Mac-optimized graphics option while dropping all Windows support, and it could take NVIDIA’s Tegra line away as an option for Windows 8 tablets while using the better parts of the ARM chip for Apple’s future iPads and iPhones.