Nvidia may walk away from $40 billion Arm acquisition

midian182

Posts: 7,782   +80
Staff member
In a nutshell: Nvidia’s protracted and troubled $40 billion acquisition of Arm could soon be abandoned by the graphics giant after repeated attempts to convince governments and regulatory boards to green-light the deal. If it does fall through, the process will have cost Nvidia over a billion dollars -- the penalty fee it agreed to pay SoftBank if the takeover failed.

Bloomberg’s sources say that Nvidia has told its partners that it doesn’t expect the transaction to close, and current owner SoftBank is now preparing for an Arm IPO, an alternative that was rumored in July last year. It was back in September 2020 when Nvidia confirmed it would be acquiring Arm for $40 billion. The company noted it would take up to 18 months to complete and that a multi-national deal of this size would require regulatory approval from the UK, China, the European Union, and the United States.

But the purchase has been beset with problems from the beginning. It attracted the attention of the UK’s Competition and Markets Authority’s (CMA) watchdog, which launched an investigation before the country’s government also intervened.

There were also the vocal demonstrations from much of the tech industry, including Qualcomm, Google, and Microsoft; even Arm’s co-founder, Hermann Hauser, said the deal would be a disaster.

There have been problems in the US, too, where the FTC sued to block the purchase over fears it would stifle competition, while China threatened to block the acquisition even if others didn’t. An extended EU antitrust investigation in October brought more talk of trouble and an Arm IPO, which now seems even more likely.

“We continue to hold the views expressed in detail in our latest regulatory filings -- that this transaction provides an opportunity to accelerate Arm and boost competition and innovation,” Nvidia spokesman Bob Sherbin said. “We remain hopeful that the transaction will be approved,” a SoftBank spokesperson said in an emailed statement to Bloomberg.

A failed deal will hit Nvidia in the pocket. SoftBank and Arm are entitled to keep the $2 billion Nvidia paid at signing, including a $1.25 billion breakup fee, no matter what happens.

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Kosmoz

Posts: 577   +1,053
No one will cry for those few lost billions for them... Ngreedia has enough to lose a few and not care. They made up more selling to miners and they will make more with new GPUs without MSRP.

They have new endeavors in Israel now, regarding CPUs.
 

ypsylon

Posts: 493   +489
Honestly, who thinks nVidia will gonna notice that 2b fee? It's like ordinary person buying loaf of bread every day for them. They can always release 3090 SuperTie for 5000$ and 3080 SuperTi for 2500$ and so on. nVidia is very adept at extorting money and they don't give 2fs about 2b lost here. Customers will pay it 10x over in a year.
 

NeoMorpheus

Posts: 1,045   +2,048
yes-gif-26.gif
 

mbrowne5061

Posts: 2,008   +1,202
This is probably good news for the industry.
nVidia was willing to pay $40B to buy ARM on the private market. What makes anyone here think they won't pay that amount to buy a controlling stake in ARM on the public market when they IPO? Just watch, nVidia is going to walk away with a 20% stake in ARM at a minimum, and I would not be surprised if they manage to lock up over 40-50%. The only thing that will stop them is if Intel, AMD, and/or Apple outbids nVidia - and then you have the same problem as before.

ARM's IP has become too valuable for the more entrenched players to ignore. ARM won't stay independent for too long.
 

BadThad

Posts: 995   +1,136
Interesting, all they had to do is figure out a way to grease the palms of the EU legislating scumbags and it would have gone through. The only TRUE reason it will fail is the bureaucrats already see the $2 billion coming from another American company. Next up, more EU penalties for "anti-competitive" behavior. THE EU IS A SCAM TO STEAL AMERICAN MONEY!
 

Lionvibez

Posts: 2,624   +2,385
Interesting, all they had to do is figure out a way to grease the palms of the EU legislating scumbags and it would have gone through. The only TRUE reason it will fail is the bureaucrats already see the $2 billion coming from another American company. Next up, more EU penalties for "anti-competitive" behavior. THE EU IS A SCAM TO STEAL AMERICAN MONEY!
I believe there is more to it than this China also has influence on this deal and they didn't want it to happen.
 

Hexic

Posts: 1,187   +1,845
TechSpot Elite
$40B offered for ARM
$68B offered for Call of Duty

Crazy.

CoD is a big part for sure - but it wouldn’t have been near $68B if it didn’t include Blizzard’s franchise.

WoW, Overwatch, Diablo (excluding Hearthstone, StarCraft & Heroes of the Storm) combined are worth many, many billions in IP alone, not including potential future earnings off of X-pacs, sequel games, etc.

 

nodfor

Posts: 209   +369
Acquisitions and mergers of this scale usually end with negative results or complete failure.
I am really surprised they actually thought it would go through and create value for them, and that $2b clause, duh, why even agree to that? To pay up for no fault of your own?
 

Avro Arrow

Posts: 2,204   +2,595
TechSpot Elite
Honestly, who thinks nVidia will gonna notice that 2b fee? It's like ordinary person buying loaf of bread every day for them. They can always release 3090 SuperTie for 5000$ and 3080 SuperTi for 2500$ and so on. nVidia is very adept at extorting money and they don't give 2fs about 2b lost here. Customers will pay it 10x over in a year.
Yup. As long as people are willing to bankrupt themselves to get a video card in a green box, nVidia has nothing to fear and will continue their crap. It still boggles my mind that people will pay hundreds more for a card that has 6 fewer GB of VRAM.
This is great news for the industry Arm must remain neutral thank god!
Unfortunately, if ARM goes IPO, there's no way in hell that it will remain neutral. Every time that a company goes IPO, the greedy stockholders destroy it. Expect all prices to rise to infinity and for ARM to become just another terrible corporation with too much market power.
nVidia was willing to pay $40B to buy ARM on the private market. What makes anyone here think they won't pay that amount to buy a controlling stake in ARM on the public market when they IPO? Just watch, nVidia is going to walk away with a 20% stake in ARM at a minimum, and I would not be surprised if they manage to lock up over 40-50%. The only thing that will stop them is if Intel, AMD, and/or Apple outbids nVidia - and then you have the same problem as before.

ARM's IP has become too valuable for the more entrenched players to ignore. ARM won't stay independent for too long.
You make an excellent point and I must agree.
Good! ARM needs to stay separate for the sake of innovation and competition!
ARM won't stay independent because it will be beholden to greedy shareholders. Being bought by nVidia or being IPO would both be the death-knell for everything that ARM once stood for.
I believe there is more to it than this China also has influence on this deal and they didn't want it to happen.
When someone claims that the EU is a scam to steal American money, it's not even worth replying to them because they're clearly insane.
 

Sausagemeat

Posts: 1,597   +1,419
Who will end up with ARM? Just remember, Nvidia were offering to sign legal agreements not to cut off or increase charges on licensing for existing clients of the architecture. If whoever does end up controlling ARM does this we are all going to feel stupid.

Somehow I feel we might regret Nvidia not buying it in the end.
 

Axeia

Posts: 38   +40
Who will end up with ARM? Just remember, Nvidia were offering to sign legal agreements not to cut off or increase charges on licensing for existing clients of the architecture. If whoever does end up controlling ARM does this we are all going to feel stupid.

Somehow I feel we might regret Nvidia not buying it in the end.
For what kind of time period? Facebook agreed to not tie it and Oculus together either. That worked for a little while and now a Facebook account is required.

Companies are like politicians, they'll say anything to get a deal pushed through. Then when the public spotlight fades they'll just do as they please.
 

Mr Majestyk

Posts: 1,146   +1,044
Fantastic news and it's shameful it was even allowed to get this far. Too bad Ngreedia doesn't take an even bigger hit.

You would have to be delusional to think this acquisition would have been beneficial to anyone but Nvidia. They could have signed anything they want but they could have still by stealth massively increased prices to competitors or not offer them the latest IP.
 

human7

Posts: 25   +15
nVidia was willing to pay $40B to buy ARM on the private market. What makes anyone here think they won't pay that amount to buy a controlling stake in ARM on the public market when they IPO? Just watch, nVidia is going to walk away with a 20% stake in ARM at a minimum, and I would not be surprised if they manage to lock up over 40-50%. The only thing that will stop them is if Intel, AMD, and/or Apple outbids nVidia - and then you have the same problem as before.

ARM's IP has become too valuable for the more entrenched players to ignore. ARM won't stay independent for too long.

Antitrust regulators can block this kind of thing, also.
 

umbala

Posts: 603   +1,007
Who will end up with ARM? Just remember, Nvidia were offering to sign legal agreements not to cut off or increase charges on licensing for existing clients of the architecture. If whoever does end up controlling ARM does this we are all going to feel stupid.

Somehow I feel we might regret Nvidia not buying it in the end.
Your guessing of what may or may not happen in the future doesn't even make sense. First of all, why does ARM need to be sold in the first place? Seems to me like this is a highly profitable company when you consider that 2+ billion Android phones are out there now. And that's not even taking into account all the recent interest from various heavy hitters like Apple and AMD, whom would all have to license IP from ARM.

Secondly, whoever tries to buy ARM next will go through the exact same process nVidia had to go through. That includes all the empty promises every single one of these companies makes about keeping everything exactly the same and not pushing out the competition, etc. But that promise is only kept for a few years before things start heading in a different direction, as they always do. Just do a few searches on companies that bought other companies and promised to keep the playing field level and check how long their promises were kept.

If anything, the next company that tries to buy ARM will be under even _more_ scrutiny than nVidia was, because of the public outcry over it. Full disclosure, I actually really like nVidia and wish them all the success in the graphics card sector, but I still would not want them buying ARM.
 

Beerfloat

Posts: 496   +935
Interesting, all they had to do is figure out a way to grease the palms of the EU legislating scumbags and it would have gone through. The only TRUE reason it will fail is the bureaucrats already see the $2 billion coming from another American company. Next up, more EU penalties for "anti-competitive" behavior. THE EU IS A SCAM TO STEAL AMERICAN MONEY!

Except, $2 billion is pocket change to the EU, the deal was also under investigation by the FTC, China, the UK and others, and US companies happily brush off these slaps on the wrist for access to the profitable EU market.

Otherwise, you present a compelling argument.
 

Puiu

Posts: 5,474   +4,397
TechSpot Elite
Yup. As long as people are willing to bankrupt themselves to get a video card in a green box, nVidia has nothing to fear and will continue their crap. It still boggles my mind that people will pay hundreds more for a card that has 6 fewer GB of VRAM.

Unfortunately, if ARM goes IPO, there's no way in hell that it will remain neutral. Every time that a company goes IPO, the greedy stockholders destroy it. Expect all prices to rise to infinity and for ARM to become just another terrible corporation with too much market power.

You make an excellent point and I must agree.

ARM won't stay independent because it will be beholden to greedy shareholders. Being bought by nVidia or being IPO would both be the death-knell for everything that ARM once stood for.

When someone claims that the EU is a scam to steal American money, it's not even worth replying to them because they're clearly insane.
ARM has been greedy for a long time now. An IPO won't change that.
 

Nintenboy01

Posts: 214   +169
Maybe Apple will buy a controlling stake now. I mean, they've benefitted from ARM heavily since the iPhone first came out and their custom designs are the most powerful using ARM