Arm's $66bn sale to Nvidia is off: Deal collapses after world's competition regulators raise concerns

SoftBank Group and Nvidia are terminating the sale of Brit-based chip designer Arm to the US tech firm due to "significant regulatory challenges" amid concerns from the tech industry that a deal would stifle competition.

The buy price, initially set at $40bn (cash and Nvidia shares) when first announced in September 2020, has risen closer to an estimated $66bn given the intervening hike in Nvidia's stock – making this the biggest deal in the semiconductor market.

"The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties. Arm will now start preparations for a public offering," said Arm.

Under the terms and conditions agreed by the companies, SoftBank Group will retain the fee of $1.25bn paid by Nvidia (this will be recorded as a profit in its fourth quarter) and Nvidia will keep hold of its 20-year Arm licence.

As the Switzerland of the chip industry, Arm's proposed sale proved controversial for Nvidia's rivals, who feared their access to chip designs would be restricted should things proceed. Both Arm and Nvidia played down those worries but regulators on three continents opened investigations.

The US Federal Trade Commission voiced unease with the agreement by suing to prevent the deal in December. It was also under review by the China Antitrust Authority and the UK government intervened in November, deepening the probe to look at the consequence to national security as well as the wider technology market.

Just weeks ago we reported that the regulatory concerns was forcing SoftBank Group to consider alternatives. And so it was also confirmed today that the parent company will lay the groundwork for a public offering within the fiscal year ending 31 March 2023.

Arm CEO has left the building

The firm has also elevated Rene Haas, president of Arm IP Products Group and a former Nvidia veep, to CEO. Current boss Simon Segars stepped down last night after 30 years with the firm.

Segars stated, "Arm has defined my working life, and I am very thankful for being given the opportunity to grow from graduate engineer to CEO. I'm very bullish on Arm's future success under Rene's leadership and can't think of anyone better to lead the company through its next chapter."

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"Rene is the right leader to accelerate Arm's growth as the company starts making preparations to re-enter the public markets," said Masayoshi Son, chairman and CEO at SoftBank Group Corp, who thanked outgoing boss Simon Segars after three decades contributing to Arm's business.

Haas ran IPG for almost five years and during his time expanded markets for Arm to include the infrastructure and automotive products, with Alibaba, Ampere, AWS, Bosch and Mobileye counted among its customers.

Prior to joining Arm is 2013, Haas had applications management, applications engineering and product engineering roles, including spending seven years at Nvidia as veep and GM of its computing business.

Folks at the UK's Competition and Markets Authority have just seen their calendared meeting workload get a lot lighter this morning, and the body confirmed it intends to "cancel its investigation into the merger" in light of the events. "The abandonment comes ahead of the planned main party hearings in February, where the CMA inquiry group was set to scrutinise information relating to the deal as part of a formal process."

Nvidia founder and CEO Jensen Huang said his firm will "continue to support" Arm as a "proud licensee for decades to come."

He added: "Arm is at the center of the important dynamics in computing. Though we won't be one company, we will partner closely with Arm. The significant investments that [Softbank CEO] Masa has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade." ®