Nvidia shares slump after UK government intervenes in Arm deal

midian182

Posts: 6,912   +62
Staff member
Why it matters: Is Nvidia's $40 billion acquisition of Arm on shaky ground? It looks that way after the UK Secretary of State for Digital, Culture, Media and Sport issued a public interest intervention notice. The uncertainty has seen team green's pre-market share price fall up to 3.1% as investors get nervous.

Nvidia's acquisition of Arm has been a controversial subject since it was revealed back in September. Qualcomm, Google, and Microsoft are just some tech giants concerned about what it would mean for Arm's open-licensing model and customer neutrality. Even its co-founder, Hermann Hauser, believes the sale would be a disaster.

The acquisition was always going to come under the scrutiny of regulators. In January, the UK's Competition and Markets Authority (CMA) requested interested third parties submit their views on the deal before a formal investigation is launched later this year.

Largest tech deals in history:

Company Acquisition Price Year
Dell EMC $64 billion 2015
Avago Technologies Broadcom $37 billion 2015
IBM Red Hat $34 billion 2018
Softbank ARM Holdings $31.4 billion 2016
Microsoft LinkedIn $26.2 billion 2016

Now, the UK's Secretary of State for Digital, Culture, Media and Sport has announced he is intervening in the sale on national security grounds. The CMA has until July 31 to "prepare a report on the competition and national security aspects of the proposed transaction" and submit it to the Secretary of State, who will then decide whether to allow it.

Nvidia's share slump comes a week after the price hit a record high following the GTC conference, where the company announced better-than-expected revenue and new Arm-based data center CPUs called Grace and Grace Next.

Nvidia will pay $12 billion in cash and $21.5 billion in shares to Softbank, which paid $31 billion for Arm in 2016. SoftBank may receive up to an extra $5 billion based on financial performance targets by Arm, and Nvidia will issue $1.5 billion in equity to Arm employees.

Nvidia has many reasons to hope the deal goes through, not least the $1.25 billion it must pay Softbank in the event the acquisition fails to close.

Permalink to story.

 

NeoMorpheus

Posts: 656   +1,220
They have no reasons to pay that much for ARM, when they already have an architectural license.

The only reason they want to buy ARM for that much money is because they found a loophole that will lock everyone out and royally screw the whole industry.

Just ask every other company that dared working with them how do they feel with that giant knife that nvidia deposited in their backs.
 

R00sT3R

Posts: 454   +1,254
The days of foreign companies snapping up UK tech firms like Arm, are over.

The UK has let go of its top tech firms far too easily and too cheaply in the past, to a degree no other country would tolerate, including the USA.

Would the US government allow a foreign takeover of Intel? Nope, not a chance in hell.

 
The days of foreign companies snapping up UK tech firms like Arm, are over.

The UK has let go of its top tech firms far too easily and too cheaply in the past, to a degree no other country would tolerate, including the USA.

Would the US government allow a foreign takeover of Intel? Nope, not a chance in hell.
I hope you’re right but given the current level of corruption in the Tory government a few million pounds from will see the deal through
 

Reehahs

Posts: 1,219   +860
The days of foreign companies snapping up UK tech firms like Arm, are over.

The UK has let go of its top tech firms far too easily and too cheaply in the past, to a degree no other country would tolerate, including the USA.

Would the US government allow a foreign takeover of Intel? Nope, not a chance in hell.

ARM is already bought by Softbank, a foreign company. Like British real estate, British companies are often held by foreign entities.
 

Danny101

Posts: 1,748   +756
Not that I'm for this, but in this case maybe the UK government should purchase it, hire private sector professionals through a board of directors to maintain it for national sovereignty sake until a private UK corporation can purchase it. I don't know. Still goes against my free enterprise bent.
 

George Keech

Posts: 40   +42
Not that I'm for this, but in this case maybe the UK government should purchase it, hire private sector professionals through a board of directors to maintain it for national sovereignty sake until a private UK corporation can purchase it. I don't know. Still goes against my free enterprise bent.
This is what I would think best in an ideal world but even if they had the money knowing the UK Gov they would buy it for 50Bn then sell it for 20Bn While its making money - Then there are of course other country national security concerns. Maybe an asset company like a pension group or something but its all a bit daft that it was sold to begin with really