According to Bloomberg, Nvidia is quietly preparing to abandon its $40 billion bid for chipmaker Arm. 👋
The planned acquisition has been held up since it was announced in Sept. 2020. In Dec. 2020, the U.S. Federal Trade Commission (FTC) sued to stop the transaction on the basis that Nvidia would “become too powerful if it gained control over Arm’s chip designs.” Maybe that’s a fair criticism… after all, Nvidia is the 12th largest company in the world by market capitalization.
The acquisition also faced resistance in Arm’s home country, the United Kingdom. Some other countries who also didn’t approve include China, The European Union, chipmaker Qualcomm, and big tech giants such as Google and Microsoft (who resisted the deal privately in correspondence with the U.S. FTC.) 🥊
It’s not over yet, but given the hurdles that lie ahead, we expect to hear more about the lapse of this deal. Analysts have already commented on the high bar of regulatory scrutiny involved in this deal, after all. Perhaps Nvidia has decided that this situation is too much for too little. 🤷 $NVDA stock took a haircut on the news, with shares falling a combined 9% today. Oof.
Nvidia’s loss today is no joke, but somebody will lose even bigger than Nvidia: Japanese multinational bank SoftBank stands to take a monster-sized L if the deal gets bounced. SoftBank, Arm’s largest shareholder, would have stood to make $74 billion from the acquisition. Consequently, it’s a possibility that SoftBank will seek an IPO for the chipmaker. The bank’s U.S-listed shares traded 3.5% lower today.
You can follow the conversation around Arm Holdings on Stocktwits. 😁