Arm’s $66 billion sale to Nvidia collapses

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SoftBank Group and Nvidia are ending the sale of British chip designer Arm to the US tech company over “significant regulatory challenges” amid tech industry fears a deal could stifle competition.

The purchase price, originally set at $40 billion (cash and Nvidia stock) when first announced in September 2020, has moved closer to around $66 billion given the rise in Nvidia stock, making it the largest transaction in the semiconductor market.

“The parties have agreed to terminate the agreement due to significant regulatory challenges preventing the completion of the transaction, despite the parties’ good faith efforts. Arm will now begin preparations for a public offering,” Arm said.

Under the terms and conditions the companies agreed to, SoftBank Group will retain the $1.25 billion fee paid by Nvidia (this will be recorded as a fourth quarter profit) and Nvidia will retain its 20-year Arm license.

As the Swiss of the chip industry, Arm’s sale proposal proved controversial for Nvidia’s rivals, who feared their access to chip designs would be restricted if things went ahead. Both Arm and Nvidia have played down those concerns, but regulators on three continents have opened investigations.

The U.S. Federal Trade Commission expressed unease with the deal by filing a lawsuit to stop the deal in December. It was also under review by China’s Antitrust Authority and the UK government intervened in November, deepening the investigation to consider the implications for national security as well as the wider tech market.

Just a few weeks ago, we reported that regulatory concerns were forcing SoftBank Group to consider alternatives. As such, it was also confirmed today that the parent company will lay the groundwork for a public offering in the fiscal year ending March 31, 2023, and elevated Rene Has, President of Arm IP Products Group, to the CEO position.

“Rene is the right leader to accelerate Arm’s growth as the company begins to prepare to re-enter the public markets,” said Masayoshi Son, chairman and CVEO of SoftBank Group Corp, who thanked outgoing boss Simon Segars. after three decades of contributing to Arm’s affairs. .

Haas led IPG for nearly five years and during his time expanded Arm’s markets to include infrastructure and automotive products, with Alibaba, Ampere, AWS, Bosch and Mobileye among his clients.

Prior to joining Arm in 2013, Haas held application management, application engineering, and product engineering roles, including spending 7 years at Nvidia as a veep and GM of its IT business.

The folks at the UK’s Competition and Markets Authority have just had their scheduled meeting workload lightened this morning, and the body has confirmed its intention to ‘cancel its merger investigation’ in light events. “The abandonment comes ahead of scheduled hearings for the main party in February, during which the CMA investigative panel was expected to review information relating to the deal as part of a formal process.”

Nvidia founder and CEO Jenson Huang said his company will “continue to support” Arm as a “proud licensee for decades to come.”

He added, “Arm is at the center of important computing dynamics. Although we are not one company, we will partner closely with Arm. The significant investments Masa has made have positioned Arm to extend the reach of the Arm processor. beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade. ®

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