NVIDIA's $66bn Planned Acquisition of Arm Collapses

👤by Tim Harmer Comments 📅08.02.2022 10:09:11

NVIDIA and Japanese tech. conglomerate Softbank have announced that the former's acquisition of UK processor and software architects Arm PLC will no longer go ahead. Citing "significant regulatory challenges preventing the consummation of the transaction", the firms mutually agreed to terminate the deal which would have been one of the largest in the tech industry.

The initial agreement for Arm's acquisition was announced in late 2020 with NVIDIA going to great pains to reassure UK regulators that R&D operations would be expanded at the chipmaker's Cambridge HQ rather than moved across the Atlantic. Reports also suggest that NVIDIA were forced to undertake significant concessions over supply of technology to current Arm customers who could ostensibly be viewed as NVIDIA's competitors, notably Apple, Samsung and AMD.

Despite these assurances a 2021 report by the Competition and Markets Authority (CMA) for the UK Dept. of Digital, Culture, Media and Sport poured cold water on the deal. The benefits of vertical integration were deemed too strong for regulatory efforts to effectively mitigate their impacts, and the incentive for NVIDIA to restrict IP access to competition would be greater than punitive actions that regulators could levy. National security concerns were also raised and widely reported at the time.

The deal was initially valued at $40bn in a mix of cash and stock, but an increase in the value of NVIDIA shares has seen this balloon to $66bn. As a consequence of the deal's breakdown NVIDIA are now expected to have to pay a break-up fee of up-to $1.25bn to Softbank.

The news adds additional context to NVIDIA's recent investment in their Israeli CPU development arm. Arm meanwhile have appointed a new Chief Executive and Softbank will aim to launch an IPO for the company before the end of the next fiscal year (March 2023), giving the firm a much-needed cash injection.

Source: Financial Times, NVIDIA/Softbank Press Release

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