According to various reports, NVIDIA Corporation’s multibillion-dollar proposal to buy British semiconductor design house Arm Ltd. is unlikely to go through, as the company has abandoned its intentions for the deal. Today’s storey is the latest in a series speculating that NVIDIA has encountered significant challenges in obtaining global regulatory approval for the affair, and as a result, the American corporation has given up hope and cancelled its plans. The flurry of claims that came late last night include sources quoted by both Reuters and the Financial Times, and they join prior reports from late January.
The Financial Times was the first news outlet to report on the situation yesterday. According to the report, three sources allege that not only did NVIDIA quit the transaction in a board meeting conducted yesterday, but that Arm’s chief executive officer, Mr Simon Segars, is also expected to retire as a result of the breakdown. The Financial Times further says that the transaction will throw Softbank Group’s plans to raise capital through asset sales into turmoil and that a prospective initial public offering (IPO) of Arm’s shares on a public market is unlikely to impress Softbank’s investors.
Furthermore, since both sides have given up, the location for a prospective Arm IPO is in question. Due to greater valuations for technology companies in U.S. markets, Softbank is reportedly preferring to list the British company’s shares on the New York Stock Exchange (NYSE). However, it is thought that British technology executives are lobbying for a London-based IPO instead.
The rumour follows one that surfaced in late January, claiming that NVIDIA had chosen to suspend its acquisition efforts due to doubts regarding regulatory approval. Two separate publications from Reuters and The Wall Street Journal back up the Financial Times’ claim. Unlike FT, which has three sources, the two cite only one source each to corroborate the demise of NVIDIA+Arm.
Both confirm that regulatory impediments are to blame for the deal’s failure, but unlike the Financial Times, they provide few additional specifics. Mr Segars will voluntarily step down as Arm’s top executive, according to the WSJ, and will be replaced by Arm’s head of IP Group, Mr Rene Haas, who will lead the firm through its IPO.
While the Journal does not mention any potential conflicts with the location of an IPO, it does state that Softbank intends to finish the process before the end of its fiscal year in March 2023.
NVIDIA has yet to reply to these claims, and the transaction’s failure is a setback for the company’s CEO, Mr Jen-Hsun Huang, who had hoped to use the deal to tap into the rapidly rising data centre and artificial intelligence markets. An arm is responsible for delivering designs to a slew of semiconductors and other companies that power some of the world’s fastest computers.
NVIDIA submitted its case to the British Competition and Markets Authority (CMA) in a recent submission, stating that the acquisition would only help the industry, as opposed to assertions made by opponents that it would hinder competition. Due to the embryonic state of the market, the business contended that an IPO would leave Arm’s management with little motivation to invest in data centres and personal computing.
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