Two former Groq engineers allege Groq's board sold the company's core assets and people through a licence and hire structure that skipped the duties of a sale. They concede no Delaware case supports them.
Big Tech buys talent and technology without buying companies because a licence plus a hiring spree closes faster than a merger and skips the review that comes with one. A complaint filed in Delaware now asks whether that shortcut works when the target is a corporation with shareholders to protect. The deal under test is Nvidia's $20 billion arrangement with Groq, and the answer will reach well beyond one chip start up.
According to the Financial Times, the complaint was filed on Friday in a Delaware corporate law court by two engineers who held Groq shares, Benjamin Serebrin and Joshua Rubin. They allege that Groq's board "was riven with conflicts of interest" and failed to obtain the best price and structure for all shareholders, and that the structure did not allow some of them to vote. The allegations are aimed at Groq's board and its sale process. Nvidia declined to comment, and Groq called the claims "meritless".
The case turns on the deal's structure. When Groq announced the deal on December 24, it described a "non exclusive licensing agreement", said Jonathan Ross, Sunny Madra "and other members of the Groq team will join Nvidia", and said Groq "will continue to operate as an independent company". Nvidia then hired nearly all of Groq's engineers, as many as 200. A company that licenses its technology to one customer and keeps trading is not obviously for sale. A company whose engineers have almost all left for that customer is harder to describe as independent. Delaware law attaches specific duties to a sale of a company, among them a search for the best price available to all holders and a shareholder vote. The plaintiffs say the board used a form that avoided those duties while delivering the substance of a sale.
The allocation of the money supports their argument. The $20 billion headline is a $17 billion licence, whose proceeds were shared among all of Groq's backers, plus a separate $3 billion pool of Nvidia stock for certain engineers who joined, Ross among them. That pool is 15% of the headline, and it went to the people who left. Nvidia's quarterly report for the period ended July 26 shows how the cash side is booked: the six month cash flow statement records $2.944 billion paid to Groq, Inc. within financing activities, none a year earlier. The licence payment was treated as taxable income for Groq because Nvidia did not buy it.
Groq's likely answer is that nobody was shorted. The licence was non exclusive, Groq survives, $17 billion went to shareholders, and courts rarely redraw a deal that paid everyone. That answer addresses total size, and the plaintiffs are arguing about allocation. Their claim concerns who received the $3 billion bonus pool and what the remaining company turned out to be worth. Nvidia later joined a funding round that values what is left of Groq at $3.5 billion, "well above the price at which the shareholders were bought out", in the FT's words. That is about one fifth of the licence fee, and it is a value the departing shareholders did not share in once they were bought out. Allocation between insiders and everyone else, decided by a board the plaintiffs call conflicted, is the ground on which Delaware has traditionally reviewed boards most strictly.
The complaint names four funds with seats on that board, BlackRock, Social Capital, Infinitum and Disruptive, as conflicted. The FT reports that the funds are not defendants. How the court handles that gap will tell the market how much a conflict allegation can carry when the conflicted parties are not before it.
The plaintiffs are candid about the weakness in their position. They write that "No Delaware decision has directly answered the question this case raises." That concession makes the case significant. A court asked to decide a question with no direct precedent can dismiss on the ground that the board followed a structure the law permits, or it can reason from first principles that a licence combined with the departure of nearly every engineer and a payout that favours some of them is a transaction in substance a sale.
The consequences would be felt in every boardroom that has used this template. Acqui hires exist because they avoid the process cost and delay of a merger, including the shareholder vote on the target. A Chancery ruling that treats a licence plus a hire as a change of control would put some of that process back, and it would do so at the point where boards are most exposed, when they decide how to divide the proceeds between those who leave and those who stay. Directors at the next target would need a market check, a fairness record and a clean answer on who got what.
Regulators are circling the same structure. The FT reports that Democratic senators Warren, Blumenthal and Wyden have called acqui hires designed to evade antitrust scrutiny, that the New York Times reported in September that the Justice Department is probing the Groq deal, and that FTC chair Andrew Ferguson has said the agency will review whether deals are structured to escape merger review. Nvidia's exposure from the Delaware case appears largely indirect: discovery that could surface how the deal was negotiated, a record that regulators can read, and a template that now carries a legal question mark. None of that requires a finding against Nvidia.
Delaware has never had to say whether a licence plus a hiring spree is a sale of the company. Whichever judge first does will write the rule that the next Nvidia style deal is priced against, and a ruling on any motion to dismiss is unlikely before the first quarter of 2027. Until then, the $3 billion pool that went to the people who left is the exhibit everyone will point to.