NVIDIA announced its intentions to acquire ARM all the way back in September, 2020, and the talks have been ongoing since. NVIDIA originally offered $40 billion for ARM, but multiple roadblocks prevented the deal from going through. The news isn’t surprising, but it’s still good news for many, and bad news for investors.
As per the agreement, NVIDIA will pay $1.25 billion to SoftBank for failing to go through with the transaction, and ARM’s CEO, Simon Segars, will step down and be replaced with ARM’s head of IP, Rene Haas. Haas led and managed NVIDIA’s own ARM business many years ago.
“NVIDIA and SoftBank Group Corp. today announced the termination of the previously announced transaction whereby NVIDIA would acquire Arm Limited (“Arm”) from SBG. 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.“
The termination agreement says that the deal was scrapped because of “significant regulatory changes preventing the consummation of the Transaction, despite good fair efforts by the parties.”, says the press statement from the parent company, SoftBank.
The deal was one of the biggest in the entire industry, and it could have given NVIDIA the leading edge for the world’s most successful GPU manufacturer. Many, including the UK government, were worried about exclusivity and other partnerships that could exist if the deal were to go though, which essentially made the transaction take so long. Most, of the chips that are powering smartphones, computers, appliances, vehicles use some form of ARM chips, and selling the group to third parties would have a huge impact on the entire industries that rely on it. SoftBank says that ARM will pursue an IPO in the fiscal year beginning April 1st.
“NVIDIA and SBG had announced that they had entered into a definitive agreement, under which NVIDIA would acquire Arm from SoftBank, on September 13, 2020. In accordance with the terms of the agreement, SBG will retain the $1.25 billion prepaid by NVIDIA, which will be recorded as profit in the fourth quarter, and NVIDIA will retain its 20-year Arm license.”