Citing regulatory challenges, SoftBank pivots to IPO ARM instead
Nvidia is giving up its $40 billion acquisition of semiconductor maker Arm Limited. Owner SoftBank and Nvidia announced Tuesday the deal’s termination, citing regulatory challenges. SoftBank instead hopes to have Arm ready for an initial public stock offering “within the fiscal year ending March 31, 2023.”
“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,” said the companies in a joint statement.
The deal was first announced in 2020. It would have created a semiconductor powerhouse at a time when Nvidia’s data center business is exploding. Nvidia, known best to consumers for performance graphics cards, makes specialized GPU-driven products for high-performance computing clusters, supercomputing, AI, metaverse projects and more. Arm licenses its chip technology to other companies, and has a big footprint in the burgeoning server Systems on a Chip (SoC) domain.
But stockholders initially reacted tepidly to the news. Companies likely to be affected by the acquisition sounded alarms. And SoftBank, Nvidia, and Arm — based in Japan, the U.S. and Britain, respectively — found themselves under intense regulatory scrutiny on both sides of the Atlantic and Pacific examined the arrangement.
In December, the U.S. Federal Trade Commission (FTC) sued to block the acquisition, saying the move was anticompetitive. That left the deal effectively dead in the water, and it simply became a question of when. In late January, word of SoftBank’s plan to spin off Arm spread on Wall Street.
Arm “has entered its second growth phase”
SoftBank walks way from the deal with $1.25 billion — Nvidia’s down payment. Nvidia keeps its 20-year license.
Nvidia founder and CEO Jensen Huang pledged his company’s continued partnership with Arm, regardless of ownership.
“The significant investments that [SoftBank CEO Masayoshi Son] has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade,” said Huang.
Son thanked Huang and Nvidia, and reiterated his company’s commitment to Arm’s successful IPO.
“Arm is becoming a center of innovation not only in the mobile computing revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase,” said Son.
Arm CEO Simon Segars is out on the news. He’s succeeded by Rene Haas. Haas has served as president of the Arm IP Products Group (IPG) since 2017.
