US chip maker Nvidia is preparing to walk away from its $40bn takeover bid for British manufacturer Arm after the deal came under fire from regulators, according to news reports.
The takeover bid from Nvidia, which would be the biggest ever deal in the semi-conductor industry, has come under intense scrutiny from regulators on both of the Atlantic since it was first announced in September 2020.
Nvidia has reportedly told partners it now does not expect to close the deal, according to Bloomberg, and Japanese investment giant Softbank, the current owner of Arm, is preparing to float Arm as an alternative to a sale.
The deal has come up against a series of major regulatory blockades in the US, UK and Europe over concerns it would restrict competition in the market. The U.S. Federal Trade Commission sued to block the buyout in December.
But an Nvidia spokesperson doubled down on the deal today, telling City AM: “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.”
Russ Shaw CBE, Founder of Global Tech Advocates and former non-exec director at Dialog semicondutor said it was not surprising that Nvidia was getting cold feet.
“We’re in the crux of a global chip crisis, and the proposed takeover of ARM by Nvidia would potentially undermine the ‘independent’ position that ARM has established with many global technology companies who are increasingly wanting and developing their own chips”, he said.
“ARM has built an incredibly strong global business from the UK, and the regulators have recognised the significance of ARM in the global semiconductor ecosystem and that the proposed acquisition comes at a very precarious time.”
Alec Burnside, head of anti-trust at law firm Dechert, told City AM it was no surprise a deal facing mutliple clearances in a “sensitive area of the economy” had faced an uphill battle.
“Transactions of this size will invariably require clearances in the major jurisdictions. And that’s true for the anti-trust, before you even get to FDI/national security clearances,” he said.
Arm and SoftBank did not immediately respond requests for comment.