NVIDIA has reportedly made little to no progress in gaining regulatory approval for its $40 billion purchase of ARM and is privately preparing to walk away from the deal, according to Bloombergsources. Meanwhile, ARM’s current owner, SoftBank, is advancing a program to make ARM an alternative to acquisition, said another person familiar with the matter.
NVIDIA announced the deal in September 2020, with CEO Jensen Huang proclaiming that it “would create a company fabulously positioned for the age of AI.” ARM designs are used under license almost universally on smartphones and other mobile devices by companies such as Apple, Qualcomm, Microsoft, Samsung, Intel, and Amazon.
The reaction began shortly after the announcement. The UK, where ARM is based, launched an antitrust investigation into the acquisition in January 2021 and another security investigation last November. In the US, the FTC recently sued to block the purchase over concerns that it would “smother” competition in industries such as data centers and auto manufacturing. China would also block the transaction if other regulators did not, Bloombergsay the sources.
We continue to maintain the views expressed in detail in our latest regulatory filings – that this transaction provides an opportunity to accelerate Arm and drive competition and innovation.
Companies including Intel, Amazon and Microsoft provided regulators with enough information to end the deal, the sources say. They previously argued that NVIDIA cannot preserve ARM’s independence because it is an ARM client itself. As such, it could also become a supplier and competitor to ARM’s licensees.
Despite strong headwinds, both companies say they are still moving forward. “We continue to hold the view… that this transaction provides an opportunity to accelerate ARM and increase competition and innovation,” said NVIDIA spokesman Bob Sherbin. Bloomberg. “We remain hopeful that the transaction will be approved,” a SoftBank spokesperson added in a statement.
Despite the latest comment, Softbank factions are pushing for an ARM IPO as an alternative to takeover, particularly while the semiconductor industry is so hot. Others at the company want to continue pursuing the transaction, as NVIDIA’s stock price has nearly doubled since it was announced, effectively raising the transaction price.
The initial contract expires on September 13, 2022, but will automatically renew if approvals take longer. NVIDIA predicted the transaction would close in approximately 18 months – a timeframe that now seems unrealistic.
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