NVIDIA’s $40 billion (£29 billion) purchase of Arm from Japan’s SoftBank has finally been terminated due to regulatory pressure.
As reported in August, the UK’s Competition and Markets Authority (CMA) found that NVIDIA’s purchase of the chip developer & designer raised “serious competition concerns”.
The UK government had previously said it wanted to examine the sale of Arm to the US firm on national security grounds. Digital Secretary Oliver Dowden issued an intervention notice, and following that, the CMA determined an in-depth investigation into the deal between NVIDIA and Arm was warranted.
After a lot of chatter, NVIDIA and SoftBank have officially announced that the parties “agreed to terminate the agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties”.
The CMA notes today (8 February): “The abandonment comes ahead of the planned main party hearings in February, where the CMA inquiry group was set to scrutinise information relating to the deal as part of a formal process.”
According to the Financial Times, the deal was worth about $40 billion when it was announced in September 2020 but increased to $66 billion (£48.7 billion) as NVIDIA’s shares took off.
Naturally, NVIDIA paints a positive picture of these latest events and looks ahead to a better future.
Jensen Huang, Founder and CEO of NVIDIA, explains: “Arm is at the centre of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm. The significant investments that Masa [Masayoshi Son, CEO of SoftBank] has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade.”
SoftBank will start preparations for a public offering of Arm within the fiscal year ending 31 March 2023.
In accordance with the terms of the agreement, SoftBank will retain the $1.25 billion (£923 million) prepaid by NVIDIA, which will be recorded as profit in the fourth quarter, and NVIDIA will retain its 20-year Arm licence.
Along with all that, there are some leadership changes at Arm. CEO Simon Segars has been replaced by Rene Haas, the president of Arm’s IP group.
SoftBank bought Arm for $32 billion (£23.3 billion) in 2016, and the planned sale to NVIDIA was perceived as an opportunity to raise cash due to the losses SoftBank suffered from investments in WeWork and Uber.