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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  • Oxford Guy - Friday, February 11, 2022 - link

    Oh really? Reply
  • mode_13h - Saturday, February 12, 2022 - link

    Yeah, it's like most companies are trying to wrestle or box, while Nvidia is fighting MMA-style. Reply
  • Oxford Guy - Saturday, February 12, 2022 - link

    Fascinating. The indictment is that a corporation is acting too effectively like a corporation. Reply
  • mode_13h - Sunday, February 13, 2022 - link

    Well, perhaps it's noteworthy because behavior too far outside the norm (and not in the interests of consumers) is likely to invite more laws and regulations. Reply
  • mode_13h - Sunday, February 13, 2022 - link

    And I think that's what tends to push most corporations to exercise a bit more restraint.

    Another factor is that corporations have their public image and reputation to consider. For instance, there are some people (and companies) that won't do business with Nvidia. Apple is one high-profile example.
    Reply
  • Oxford Guy - Monday, February 28, 2022 - link

    Not particularly interesting doublethink. Reply
  • Qasar - Friday, March 4, 2022 - link

    you would know, you are the pro at it. Reply
  • ballsystemlord - Tuesday, February 8, 2022 - link

    Soon part 2 will begin. <spoiler>Nvidia buys up all the ARM stock.</spoiler> Reply
  • mode_13h - Tuesday, February 8, 2022 - link

    Once ARM IPOs, they could probably buy enough shares to get a seat on the board, but that's a far cry from actually owning ARM. Reply
  • Silver5urfer - Tuesday, February 8, 2022 - link

    People say this is the worst but they are wrong due to how bad M&As happened just a few days back - Microsoft buys out entire Zenimax. Then moves to Acti-Blizz with whopping 78Bn USD deal. Sony did Bungie not that it's a great studio but the acq are too many. And Disney bought out entire Fox for 70bn+, ATT bought out full WB CNN networks for 70bn+, Comcast bought out NBC Universal. Apple got a nice cheap insider sponsored deal for 5G from Intel for just 1.5Bn. Avago took over Broadcom, Dell and EMC, the list goes on and on and if you look at P&G how they own literally everything on the market shelf and Pepsi Co.. And also do not forget Tencent. They own almost a small pie in very big industries from games on PC / Console (Epic Games they own more than 40% so all of Unreal Engine) and on mobile virtually all trash MTX garbage game publishers. And in Hollywood studios and what not. Along with the conglomerates corporations, you know what I mean. This is not an isolated case.

    Now moving to this, Nvidia simply wanted to become like AMD and Intel and also blast Apple hard. This deal was cancelled because of Apple and Microsoft along with Google. Qcomm lobbies a lot as well. Apple is my bet which have higher say, they lead the market with their yearly garbage refreshes and push phones every year with sealed in battery and soldered products how can they take Nvidia ? esp after how their relationship was.

    Consumers are already at a loss with ARM garbage use and throw technology, like show me any phone in proper working condition with full speed after 2-3 years ? while x86 PC we have Core 2 Quad still playing games with SSE patches on the exe. And Pentium 4 running Windows 11. Last time I read even ARM says how their own licensees are their competition. No wonder they wanted to take this to an IPO esp when SoftBank blew billions on that Wework. I think these Japanese corporations get purposefully sabotaged look at Toshiba more than 100 years old corporation blew cash on Westinghouse, Sony lost a lot of money, SoftBank I bet it's the investor greed.

    IPO is a big investor greed based garbage. Now ARM going IPO means it will be in that market turmoil where stock is literally used to manipurate for lining the pockets of the elite and making changes dictating things around only on the basis of greed. Intel was the victim once the elite started to see Apple and mobile garbage being top . Intel was left to rot with poor management on the CMOS Lithography and uArch. Also axed the entire fantastic tech of Optane, everything for greed. Just like Detroit where much of the jobs and industry was rot due to export of everything to China and overseas.

    A shame, multiple companies allowed this to happen. Softbank on it's poor management of assets, lobbying against this, Nvidia's policies of more proprietary nature rubbish crap.
    Reply

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