NVIDIA’s year-and-a-half long effort to acquire Arm has come to an end this morning, as NVIDIA and Arm owner SoftBank have announced that the two companies are officially calling off the acquisition. Citing the current lack of regulatory approval of the deal and the multiple investigations that have been opened up into it, NVIDIA and SoftBank are giving up on their acquisition efforts, as the two firms no longer believe it will be possible to receive the necessary regulatory approvals needed to close the deal. In lieu of being able to sell Arm to NVIDIA (or seemingly anyone else), SoftBank is announcing that they will instead be taking Arm public.

First announced back in September of 2020, SoftBank and NVIDIA unveiled what was at the time a $40 billion deal to have NVIDIA acquire the widely popular IP firm. And though the two companies expected some regulatory headwind given the size of the deal and the importance of Arm’s IP to the broader technology ecosystem – Arm’s IP is in many chips in one form or another – SoftBank and NVIDIA still expected to eventually win regulatory approval.

However, after 17 months, it has become increasingly clear that government regulators were not apt to approve the deal. Even with concessions being made by NVIDIA, European Union regulators ended up opening an investigation into the acquisition, Chinese regulators have held off on approving the deal, and US regulators moved to outright block it. Concerns raised by regulators centered around NVIDIA gaining an unfair advantage over other companies who use Arm’s IP, both by controlling the direction of its development and by their position affording NVIDIA unique access to insights about what products Arm customers were developing – some of which would include products being designed to compete with NVIDIA’s own wares. Ultimately, regulators have shown a strong interest in retaining a competitive landscape for chips, with the belief that such a landscape wouldn’t be possible if Arm was owned by a chip designer such as NVIDIA.

As a result of these regulatory hurdles, NVIDIA and SoftBank have formally called off the acquisition, and the situation between the two companies is effectively returning to status quo. According to NVIDIA, the company will be retaining its 20 year Arm license, which will allow the company to continue developing and selling chips based around Arm IP and the Arm CPU architecture. Meanwhile SoftBank has received a $1.25 billion breakup fee from NVIDIA as a contractual consequence of the acquisition not going through.

In lieu of selling Arm to NVIDIA, SoftBank is now going to be preparing to take Arm public. According to the investment group, they are intending to IPO the company by the end of their next fiscal year, which ends on March 23rd of 2023 – essentially giving SoftBank a bit over a year to get the IPO organized. Meanwhile, according to Reuters, SoftBank’s CEO Masayoshi Son has indicated that the IPO will take place in the United States, most likely on the Nasdaq.

Once that IPO is completed, it will mark the second time that Arm has been a public company. Arm was a publicly-held company prior to the SoftBank acquisition in 2016, when SoftBank purchased the company for roughly $32 billion. And while it’s still too early to tell what Arm will be valued at a second time around, it goes without saying that SoftBank would like to turn a profit on the deal, which is why NVIDIA’s $40 billion offer was so enticing. Still, even with the popularity and ubiquity of Arm’s IP across the technology ecosystem, it’s not clear at this time whether SoftBank will be able to get something close to what they spent on Arm, in which case the investment firm is likely to end up taking a loss on the Arm acquisition.

Finally, the cancellation of the acquisition is also bringing some important changes to Arm itself. Simon Segars, Arm’s long-time CEO and major proponent of the acquisition, has stepped down from his position effective immediately. In his place, the Arm board of directors has already met and appointed Arm insider Rene Haas to the CEO position. Haas has been with Arm since 2013, and he has been president of the Arm IP Products Group since 2017.

Arm’s news release doesn’t offer any official insight into why Arm is changing CEOs at such a pivotal time. But with the collapse of the acquisition, Arm and SoftBank may be looking for a different kind of leader to take the company public over the next year.

Sources: NVIDIA, Arm

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  • Spunjji - Wednesday, February 9, 2022 - link

    Samsung, Qualcomm and Mediatek have all gone back to ARM base offerings...

    ARM's base designs don't really need to hold out in the server space - they get royalties from the custom designs there, and every custom design builds a greater ecosystem in which their own designs can potentially get a niche foothold. Win/win.

    And yes, you're arguably wrong about ARM being sold to Nvidia being a way to maintain open access. Nvidia have closed off everything they've ever acquired.
    Reply
  • mode_13h - Wednesday, February 9, 2022 - link

    > I also don't have much faith that ARMs base designs
    > are going to hold out much longer in server space

    Huh? Okay, Ampere announced another in-house core, but just about everyone else is using ARM's IP.

    > I honestly believe getting sold to nVidia was the only way you could maintain
    > some semblance of open access while also giving the resources needed to
    > take the fight to other teams.

    This doesn't make sense. Nvidia is a profit-maximizing company. They're not going to operate ARM at a loss, just to be nice.
    Reply
  • Uteman - Wednesday, February 9, 2022 - link

    So much irrelevant blather about the product when the subject matter is one company buying another. The fact that this attempt dies just means if NV is serious they will take another route. If Softbank lists ARM publicly then anyone can buy shares maybe they buy enough to get seats on the board and things can develop from there. Might cost NV more or less who knows, they may get their say at board level anyway. Reply
  • mode_13h - Thursday, February 10, 2022 - link

    > maybe they buy enough to get seats on the board and things can develop from there.

    Even hostile takeovers are still subject to regulatory approval.

    This marriage is canceled. Get over it. Nvidia has.
    Reply
  • Oxford Guy - Monday, February 28, 2022 - link

    'Get over it. Nvidia has.'

    Is that from one of your crystal balls?

    So many ridiculous pat statements.
    Reply
  • Qasar - Friday, March 4, 2022 - link

    " So many ridiculous pat statements. " again you are the pro, hypocrite Reply
  • HardwareDufus - Monday, February 14, 2022 - link

    I don't see why this deal was nixed.... AMD was allowed to buy Xilinx (49B).

    this is the AMD/Intel duopoly being protected.... This isn't about ensuring there is competition in the marketplace.

    Perhaps it was felt this would affect the Samsungs, Apples, MediaTeks and Qualcomms of the world if Nvidia were to do something with Arm licensing.
    Reply
  • mode_13h - Tuesday, February 15, 2022 - link

    The difference between ARM and Xilinx is that the former licenses ISA and cores used across the industry, while the latter mostly just sells complete and self-contained chips. There's really no comparison.

    It should be obvious, if you think about just how many products from how many different chip makers have ARM cores, that the Nvidia/ARM acquisition gives Nvidia too much power and competitive advantage.

    > Perhaps it was felt this would affect the Samsungs, Apples, MediaTeks and
    > Qualcomms of the world if Nvidia were to do something with Arm licensing.

    It's not only about the big players. ARM has thousands of customers, most of whom you probably haven't even heard of. And yes, Nvidia could mess with licensing fees and availability windows of ARM's IP to advantage themselves, but they also would be privy to details of upcoming products from their competitors that would give them more insight than they should have.

    Think of it like cars: it's like if 90% of auto makers used motors from one vendor and then Tesla goes and buys them up. Now, all of the other car makers have to collaborate and do business with their competitor to get motors for their new models. Now, where that analogy breaks down is that it's a lot easier to switch to a different motor supplier (or design & build your own) than it is to change CPU ISA, due to the massive amounts of software involved.
    Reply

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