This Is It: Nvidia’s Expensive Arm Purchase Is a Done Deal

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Photo: Justin Sullivan (Getty Images) – It will cost Nvidia $1.25 billion if it fails to complete the deal with Arm owner Softbank. “Significant regulatory difficulties” have scuttled Nvidia’s $40 billion acquisition of Arm, Softbank stated on Monday.

The deal, announced in September 2020, faced regulatory scrutiny in the United States, the United Kingdom, and the European Union, and in December of last year, the US Federal Trade Commission sued to halt the transaction, arguing that Nvidia would gain too much power purchasing a company whose chip designs are used in rival products and across a wide range of industries.

It wasn’t all bad news for Nvidia’s competitors; some even went so far as working with authorities to thwart the transaction. Microsoft, Qualcomm, Intel, and Amazon are among the companies that depend on Arm’s semiconductor technology and object to the takeover. To its competitors’ dismay, Nvidia promised that Arm will “continue to run [its open-licensing strategy] while keeping [its] worldwide customer neutrality.”

By March of 2022, Nvidia had planned to conclude the purchase within 18 months, but a Bloomberg report showed that AMD and Intel rivals were on the verge of abandoning their plans. Nvidia will be obligated to pay Softbank $1.25 billion for failing to complete the purchase now that it has formally withdrawn from the agreement, as originally reported by Financial Times.

Softbank will lose out on Nvidia stock that has risen since the planned acquisition was publicized, despite indications that the transaction has struck snags. At $40 per share, the deal was originally valued at $87 billion in November, when Nvidia’s stock price hit its highest point.

After the setback, Nvidia and Softbank are making moves quickly. Arm’s CEO Simon Segars has been replaced by Rene Haas, the company’s head of intellectual property (who was formerly an Nvidia VP and general manager of the company’s computer products unit), and the move is effective immediately.

“[Segars] has decided that at this moment in his career, the time and work necessary to take the business public and everything surrounding it was not something he wanted to sign up to,” Haas said to TechCrunch. That’s why he’s going to resign.” I’m going to step in and take his place.”

Softbank is apparently rethinking its strategy and intends to sell Arm within the next year by seeking an IPO. According to the Financial Times, Softbank wants to list Arm on the US stock market in order to get a greater price.

As the biggest semiconductor acquisition, Nvidia’s acquisition of Arm would have given the graphics card manufacturer control over a business whose chip design is utilized in practically every technology we use today, including vehicles, wearables and smartphones.