NVIDIA’s deal to buy Arm has reportedly collapsed

While NVIDIA announced plans to acquire U.K.-based chip designer Arm from SoftBank all the way back in September 2020, the company has run into several regulatory hurdles since then. Major companies including the likes of Qualcomm, Microsoft, and Google raised concerns about NVIDIA’s acquisition of the company, claiming that the deal would harm competition in the industry by giving NVIDIA complete control of Arm’s chip designs. As a result, regulators from the EU, U.S., U.K., and China opened antitrust investigations into the acquisition. Now, according to an exclusive report from ArsTechnica, the deal has been called off.

The report by ArsTechnica comes according to three people with direct knowledge of the transaction, as NVIDIA opted to abandon its pursuit of the company at a board meeting on Monday. The collapse of the $66 billion deal sees what would have been the largest-ever acquisition in the chip sector to an end, and opens up the future of Arm to go to another bidder. One of the people with knowledge of the situation told ArsTechnica that SoftBank intends to unload Arm through an initial public offering before the end of this year. SoftBank will also receive a break-up fee of $1.25 billion.

The cash-and-stock transaction was worth approximately $38.5 billion when it was announced in September 2020. However, the value rose as NVIDIA’s share prices rose, reaching a peak of $87 billion last November. Not only has the collapse of the deal seriously hurt SoftBank’s projected finances, but it has also hurt the current management at Arm. CEO Simon Segars will be replaced by Rene Haas, current head of the company’s intellectual property unit.

It is unclear what the future of Arm may be, but British politicians allegedly feel that Arm is a national asset to be protected, and should be listed on the domestic market. The report details that SoftBank would prefer to list Arm in New York. NVIDIA’s offering to the U.K.’s Competition and Markets Authority (CMA) that it would maintain Arm’s current neutral licensing model did not seem too convincing.

Between the multiple regulatory investigations that had been undertaken into the acquisition of Arm, it was expected that time would be tight if it were to even be completed. NVIDIA said in September of 2020 that the acquisition was scheduled to be completed within 18 months. However, Jensen Huang, NVIDIA CEO, admitted in August 2021 that it was taking a little bit longer than expected. SoftBank agreed with NVIDIA at the time that the acquisition should be completed by the end of 2022.

It is unclear what the future of Arm may be, but it doesn’t seem that its future involves NVIDIA.

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