Nvidia's $20 Billion Groq Deal Faces Lawsuit Over Alleged Stockholder Shortfall
Nvidia's $20 billion deal to acquire assets from AI chip designer Groq is facing legal challenges. Former Groq engineers Joshua Rubin and Benjamin Serebrin filed a lawsuit in Delaware's Court of Chancery on October 2, alleging that the deal unfairly shortchanged stockholders. They claim the agreement offered a "lowball" price and bypassed the required stockholder vote, costing investors billions.
The lawsuit alleges that Groq's board of directors, influenced by conflicts of interest, sold the company to Nvidia without proper valuation processes. It also claims that Nvidia allocated $17 billion for a non-exclusive license and set aside $3 billion in restricted stock units for Groq employees transitioning to Nvidia, while benefiting certain board members with windfall returns.
Groq has defended the deal, stating that the licensing agreement with Nvidia delivered exceptional value for the company, its investors, and employees. A Groq spokesperson called the lawsuit "meritless" and vowed to vigorously defend against it. Nvidia has not yet commented on the allegations.
The deal included approximately 150 to 200 Groq engineers becoming Nvidia employees, with Groq founder and CEO Jonathan Ross and president Sunny Madra joining Nvidia as part of the agreement. Nvidia CEO Jensen Huang emphasized that the deal would expand Nvidia's capabilities in AI inference and real-time workloads, though it did not involve acquiring Groq as a company.