Nvidia is preparing to abandon the idea of the historic takeover of ARM, after having proposed nearly 35.5 billion euros to acquire the British company in 2020. Nvidia would lose more than a billion euros in the process.
According to information from Bloomberg News, Nvidia is preparing to give up the buyout of ARM from SoftBank, which acquired the company in 2016 for $32 billion. Nvidia had offered a colossal sum of 40 billion dollars (35.5 billion euros) to acquire the company specializing in chip design, but although this agreement was signed, it was ultimately blocked by the Federal Trade Commission (FTC) American.
Indeed, the FTC considered that such a takeover ” would stifle competing next-gen technologies », in addition to being uncompetitive in the eyes of the European Commission and the UK Competition and Markets Authority.
Abandoning the transaction would cost Nvidia more than 1 billion euros
By renouncing this historic acquisition, Nvidia will have to cede the 1.25 billion dollars (1.11 billion euros) in severance pay which have already been paid to SoftBank as a deposit on the transaction. Nvidia will still recover the two billion dollars that had been paid in initial payment, but it would still be a significant loss for the company if the abandonment were to be confirmed.
Nvidia was however very optimistic about the takeover of ARM, even calling it ” great opportunity for the industry “. The Bloomberg report adds, however, that the uncertain nature of the acquisition has consequence of creating factions within Nvidia and SoftBank. Indeed, part of the staff would think that the operation is a waste of resources, while the other would be confident in its success. Nvidia’s share price has lost almost 30% of its value since its all-time high last November, but is still up almost 80% since the signing of the agreement between Nvidia and SoftBank.
This type of buyout with huge amount is becoming more and more common in the industry. Recently, the gaming world was shaken by the takeover of Activison Blizzard by Microsoft for more than 60 billion euros. This should also be finalized in fiscal year 2023 if he obtains all authorizations from the competent authorities.
Source: Bloomberg