Groq engineers sue board over Nvidia's $20bn acqui-hire deal

The structure of Nvidia's roughly $20 billion Groq deal is now facing a court test, and the plaintiffs are the people who built the technology. Former Groq engineers Benjamin Serebrin and Joshua Rubin, both shareholders, have sued Groq's board in Delaware's corporate court, according to the Financial Times, as relayed by Techmeme. The complaint was filed on Friday.

The deal, announced on 24 December 2025, was set up as a non-exclusive licence of Groq's inference technology to Nvidia. Reports put the value at about $20 billion: roughly $17 billion in cash licence fees, plus about $3 billion in Nvidia stock for around 200 Groq engineers who moved to Nvidia. They included founder Jonathan Ross and President Sunny Madra.

The plaintiffs allege breach of fiduciary duty. They say the board sold Groq's core assets and top staff and left a hollowed-out shell. Common stockholders, they argue, were undervalued and cashed out cheaply while insiders were favoured, and the payout ignored upside and synergies. They also claim the licence fee was taxed as income, that some holders were denied a vote, and that the board was conflicted. The suit points at four "conflicted funds": BlackRock, Social Capital, Infinitum and Disruptive. None is named as a defendant.

The plaintiffs concede the legal ground is untested: "No Delaware decision has directly answered the question" of treating an acqui-hire as a merger. Nvidia declined to comment, and Groq did not immediately respond.

Groq has carried on since the deal. It stayed independent under CEO Simon Edwards, who runs GroqCloud, later valued at $3.5 billion in a round Nvidia joined. Nvidia unveiled its first Groq-based chip in March and reached full production in August.

Deal figures vary by outlet. Dealroom puts the licence at $11 billion and the total at $14.7 billion. The claims are allegations, not court findings.

The suit goes after the mechanics that make the acqui-hire attractive. A licence plus a hiring package avoids a merger vote and, for the buyer, a full acquisition. The plaintiffs argue that route let a board steer value to insiders and away from common holders. If a Delaware court agrees that such a deal should be treated like a merger, the cost and the process of this structure change for every buyer and every start-up board that considers one.

Nvidia is not a defendant, but it has the most to watch. It has a working chip built on the Groq technology and a stake in the GroqCloud round, so a ruling that disturbs the original terms would reach well beyond Groq's cap table. The timing adds pressure. Senators Warren, Blumenthal and Wyden have criticised acqui-hires, the New York Times reported a DoJ probe in September, and FTC Chair Andrew Ferguson is reviewing such deals. Start-up founders and their investors should watch whether Delaware treats the deal as a merger, because the answer shapes how common shareholders get paid in the next one.