Nvidia confirms its $40 billion acquisition of Arm has been terminated

[midian182]

What just happened? Nvidia’s $40 billion acquisition of Arm has collapsed. The US tech giant has announced that the intense regulatory scrutiny the deal faced prevented the transaction from completing. As previously speculated, Arm will now start preparations for an initial public offering (IPO).

There were reports that Nvidia was considering walking away from the acquisition last month. Now, the company has confirmed that "the parties agreed to terminate the Agreement" due to the "significant regulatory challenges" it faced.

"Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come," said Nvidia CEO Jensen Huang. "Arm is at the center of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm. The significant investments that Masa 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."

News that Nvidia had begun the first steps in acquiring UK-based Arm from SoftBank arrived back in September 2020. Team green said it would take around 18 months to complete a deal of this size, but it has been beset by problems, mostly due to the regulatory approval required from the UK, China, the European Union, and the United States.

In addition to an investigation by the UK’s Competition and Markets Authority’s (CMA) and intervention from the country’s government, the FTC sued to block the acquisition over fears it would stifle innovation, there was an extended EU antitrust investigation, and China threatened to block the purchase even if others didn’t.

There was also significant pushback from those within the tech industry. Qualcomm, Google, and Microsoft all voiced concerns, even Arm’s co-founder, Hermann Hauser, said the deal would be a disaster.

Arm will now start preparations for an IPO within the fiscal year (ending March 31, 2023), a move many believed would happen if the deal fell through. SoftBank will receive a $1.25 billion breakup fee that Nvidia previously agreed to pay if the purchase failed to complete.

The Financial Times writes that the deal’s failure will result in Arm’s chief executive, Simon Segars, being replaced by Rene Haas, head of the company’s intellectual property unit. The publication also notes that the cash-and-shares acquisition would have been worth $66 billion as Nvidia’s share price has increased since the initial announcement.

The tech industry will doubtlessly breathe a sigh of relief following confirmation of the deal’s demise. Many Arm licensees feared the consequences of a competitor such as Nvidia owning the company they rely on for their chip designs.

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https://www.techspot.com/news/93309-nvidia-confirms-40-billion-acquisition-arm-has-terminated.html

 

[winjer]

It's the best result for the industry.

 

[Puiu]

It's crazy to think that this was much cheaper than the Activision-Blizzard acquisition.

 

[R00sT3R]

Oh dear, what a shame...never mind.

 

[psycros]

Arm going public might be bad for tech consumers. Its likely to mean price increases for their chips and IP which will be passed on to nearly every product. Once a handful of billionaire outsiders get control of your company everything takes a back seat to profit.

 

[Mowserx]

Arm going public might be bad for tech consumers. Its likely to mean price increases for their chips and IP which will be passed on to nearly every product. Once a handful of billionaire outsiders get control of your company everything takes a back seat to profit.

I was thinking the same thing. Likely going to be a bad situation either way.

edit: Regarding IPO, I was worried that they’d be manipulated by stock value, etc and their product would suffer.

 

[elementalSG]

ARM needs to stay independent and allow all companies in the world to be able to license its intellectual property, so this is great. No one wants ARM's technology to go the way of 3dfx's SLI after it got taken over by NVidia.

 

[Squid Surprise]

If they do an IPO, what's to stop Nvidia from simply purchasing stock - probably for much cheaper than 66 billion,....

 

[fps4ever]

I was thinking the same thing. Likely going to be a bad situation either way.

If ARM themselves couldn't make enough money to survive then something has to be done. Either they don't charge enough for their IPO portfolio or bad management. Or let it die and sell off its IP and fragment all the property to bigger players.

 

[Theinsanegamer]

If ARM themselves couldn't make enough money to survive then something has to be done. Either they don't charge enough for their IPO portfolio or bad management. Or let it die and sell off its IP and fragment all the property to bigger players.

Why would ARM, which dominates both the phone and IoT industry, be short of cash? If they are THAT incompetent that they run ARM into the ground, then really the IP should go to another company that can manage itself properly.

 

[fps4ever]

Why would ARM, which dominates both the phone and IoT industry, be short of cash? If they are THAT incompetent that they run ARM into the ground, then really the IP should go to another company that can manage itself properly.

Good question. You tell me why they are so eager to sell? And your last point is the same as in my post. Sell it so it can be managed properly if that is the case.

 

[Theinsanegamer]

Good question. You tell me why they are so eager to sell? And your last point is the same as in my post. Sell it so it can be managed properly if that is the case.

Greed, most likely. Same reason FCA was looking to merge despite finally making record profits again ont he back of their RAM and JEEP brands.

EDIT: Greed on softbank's part, IMO, not ARM itself. Softbank is still licking the wounds of the failed investment into WeWork.

 

[fps4ever]

Greed, most likely. Same reason FCA was looking to merge despite finally making record profits again ont he back of their RAM and JEEP brands.

Yeah, that seems to be as good a reason as any.

 

[Nintenboy01]

It's crazy to think that this was much cheaper than the Activision-Blizzard acquisition.

people really do value games and entertainment it seems. Moreso than the chip architecture powering many of the gadgets they play games on.

 

[punctualturn]

We didnt dodged a bullet, we dodged a nuke!

Obligatory, it couldnt had happened to a better and nicer company, regardless of the many drones they have in this place.

 

[nodfor]

If they do an IPO, what's to stop Nvidia from simply purchasing stock - probably for much cheaper than 66 billion,....

Regulators cannot only block acquisitions, they can also force companies to divest or breakup.

We didnt dodged a bullet, we dodged a nuke!

Obligatory, we couldnt had happened to a better and nicer company, regardless of the many drones they have in this place.

NVIDIA should be super happy with the result. The news back then helped the stock price rally momentum so the 1,25 bn payout is no biggie
And acquisition/mergers of this size usually end up bad for the buyer, an extra plus.

 

[Mister_K]

ARM needs to stay independent and allow all companies in the world to be able to license its intellectual property, so this is great. No one wants ARM's technology to go the way of 3dfx's SLI after it got taken over by NVidia.

I mean Id love to invest, Tesla stocks are way too high for my taste hah

 

[Sausagemeat]

The tech industry is NOT breathing a sigh of relief. Only the uneducated are doing that. Believe me, anywhere that’s licencing ARM tech is now bracing themselves. This is dreadful news. Nvidia buying ARM is a situation a million times better than going public. ARM is now going to be ruthlessly driving towards profits for the shareholders no matter what. In fact if they don’t make profits there will be lawyers probing as to why. And pre-existing licensing deals? Yeah they are getting price increases big time, that means consumers will pay more. At least Nvidia was offering to sign legal agreements to say they wouldn’t do this.

 

[BadThad]

The Titanic sunk, surprise, surprise.....NOT.

 

[elementalSG]

For those who are saying ARM going public is terrible, you guys do know that ARM was a PUBLIC company trading under the stock ticker ARMH on the NASDAQ until mid-2016 when SoftBank bought it for $32 billion and took it private, right? It’s been a private company for just the last 5 years. It was public much longer than that in the past.

Why ARM Holdings plc Stock Skyrocketed Today | The Motley Fool

The semiconductor company is being acquired at a hefty premium.

www.fool.com

 

[Lozzy]

There goes the last hope for Nvidia making graphics cards faster without a near 1:1 increase in power consumption.

But probably a good thing for ARM

 

[Puiu]

There goes the last hope for Nvidia making graphics cards faster without a near 1:1 increase in power consumption.

But probably a good thing for ARM

Just a good thing for consumers.

 

[punctualturn]

NVIDIA should be super happy with the result.

Sorry, but I am happier for myself and the rest of the industry that these b@stards werent allowed to screw us with this purchase.

Man, really sucks how people keep giving this beyond corrupt company free passes.

I understand sites and youtubers since its clear they are getting nice "loyalty" checks, but we the consumers are getting shafted by nvidia and their actions.

 

[SixTymes]

It's the best result for the industry.

you must like corruption then if you think that.

 

[SixTymes]

Sad to see this industry has been corrupted, not unlike poltics.