4
The sale of ARM to Nvidia for 40 billion dollars was to represent the largest acquisition in history in the semiconductor industry. Eventually, it will be nothing.
© Getty – Pavlo Gonchar/SOPA Images/LightRocket
That’s called having a sense of timing. The day before the presentation of the Chips Act in Brussels, SoftBank signed the end of the planned acquisition of the British manufacturer of mobile chips ARM by the American giant Nvidia. Citing “significant regulatory challenges”SoftBank and Nvidia have indeed decided to stop the fees.
As part of the abandonment of this operation, the Japanese conglomerate will be able to console itself by keeping the sum of 1.25 billion dollars paid by Nvidia at the time of the signing of the contract, but this is nothing compared to the magnitude of the transaction originally planned. Announced in September 2020, the sale of ARM to Nvidia was then estimated at 40 billion dollars, which was to represent the largest acquisition in history in the semiconductor industry. Eventually, it will be nothing.
An operation in the crosshairs of the American and European authorities
As soon as this merger was announced, regulators around the world did not fail to express their concerns. In their eyes, this operation would have made it possible to bring out a titan of semiconductors that could lead to possible abuses of dominant position harmful to the industry. Faced with the fears of the sector, investigations were launched in the United States, where the Federal Trade Commission (FTC), the American policeman of competition, had even taken legal action to block the operation, but also in the European Union and United Kingdom. In addition, several companies, such as Google, Microsoft, Qualcomm, Intel and Amazon, have mobilized to derail this mega-acquisition. It is now done.
Faced with the growing revolt against this operation, the acquisition of ARM by Nvidia had taken the lead in the wing in recent months. In this context, SoftBank, which had paid 32 billion dollars in 2016 to take control of ARM, had begun to study other alternatives to separate from it. The Japanese firm was thinking in particular of bringing the British company on the stock market to withdraw from it while making its initial investment profitable. After the failure of the merger with Nvidia, SoftBank retained this option. The IPO of ARM must therefore be carried out by March 2023.
Still, this is a new disappointment for Masayoshi Son, the emblematic boss of SoftBank, who has had a series of setbacks since the fiasco of the aborted IPO of WeWork in 2019. The net profit of the conglomerate Japanese has also collapsed by more than 97% over one year. He now has to wait several months to try to recover his bet on ARM, or even make it grow, on the occasion of the IPO of the British company. However, while the semiconductor sector is particularly attractive at the moment, given the worldwide shortage of electronic chips, ARM is not immune to the ups and downs of the stock markets, as we have seen in recent days many technology companies, which have plunged in the wake of Meta (Facebook).