Nvidia is preparing to stop its planned acquisition of Arm. Bloomberg reported the news based on anonymous sources familiar with the matter.
In 2020, Nvidia offered $40 billion to acquire Arm. According to Bloomberg, the plan is likely to be terminated. Sources familiar with the matter claim that Nvidia expects the acquisition to fall through. SoftBank, Arm’s current owner, is allegedly prepping Arm for an IPO.
Nvidia has yet to confirm the news. Recently, a Nvidia spokesperson described the acquisition as “an opportunity to accelerate Arm”. In reality, the chance of an opportunity is small. The US Federal Trade Commission (market watchdog) launched a lawsuit to stop the acquisition in December 2021. Market authorities in Europe objected as well. Reasons differ, but the common thread is the same: Nvidia’s acquisition creates the risk of an overly dominant market player.
Nvidia has been sailing into a headwind from day one. Market authorities and competitors sounded the alarm shortly after the acquisition was announced. Yet, acquisitions may be approved after further investigation. Besides, organisations have the possibility to refute objections. Anything is possible, but for Nvidia, a favourable outcome is unlikely.
Bloomberg’s sources confirm suspicions that have been around for some time. Even if the acquisition eventually gets greenlit, its completion is months or years away. SoftBank is probably not willing to wait in uncertainty until that moment arrives. The value of Arm might change.
In addition, the question remains whether Nvidia is prepared to challenge the decisions of market authorities. According to Bloomberg’s sources, Nvidia considers the conflict a losing battle. Although the reports are unconfirmed, everything checks out.