Nvidia preparing to abandon $40-billion Arm acquisition deal - Bloomberg

• Nvidia tells partners that it doesn’t expect the deal to close, whose initial deadline was March 2022

• SoftBank, Arm’s current owner, is ramping up preparation to list the chip designer

Nvidia Corp (NASDAQ: NVDA) is “quietly” preparing to abandon its $40 billion acquisition deal it offered SoftBank Group Corp to buy British chip designer Arm, Bloomberg News reported on Tuesday.

The U.S. chipmaker has told partners that it’s not expecting the transaction to close, the news agency reported, citing people familiar with the matter.

Moreover, the report said SoftBank is also preparing for an initial public offering of Arm as an alternative to the Nvidia takeover.

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“We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation,” Nvidia spokesperson Bob Sherbin told Bloomberg News.

“We remain hopeful that the transaction will be approved.”

Nvidia shares fell more than 5.5% in early trading in New York.

Regulatory roadblocks

In September 2020, the U.S. chipmaker Nvidia agreed to buy Arm in a cash-and-stock deal for $40 billion. With Nvidia’s stock price surging over the past year as the proposed agreement has stuck under regulatory review, the actual value of the transaction is now pegged close to $54 billion.

The acquisition, which was poised to become the biggest semiconductor deal in history, has faced intense scrutiny from regulators worldwide after its announcement.

Nvidia faced several regulatory obstacles in China, where Arm has a joint venture with private equity firm Hopu Investments.

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Last October, the European Commission opened an in-depth probe against the deal, saying the “transaction could lead to higher prices, less choice and reduced innovation in the semiconductor industry.”

The U.S. Federal Trade Commission (FTC) sued the semiconductor merger deal on antitrust grounds last month.

Britain’s competition regulators are probing the agreement over concerns that it would threaten national security, as Arm’s energy-efficient chip architectures are used in 95% of the semiconductors designed in China, and almost all of it is used on smartphones globally.

Picture Credit: Nvidia