With the deal terminated, Arm will now make preparations for a public offering within the fiscal year ending 31 March 2023


Nvidia pulls out from $40bn deal to acquire Arm. (Credit: NVIDIA Corporation)

Nvidia and SoftBank Group have scrapped their previously announced transaction under which the former agreed to acquire UK-based chip design provider Arm for $40bn from the Japanese conglomerate.

The cash and stock deal was terminated due to significant regulatory obstacles, which prevented the deal from getting closed.

In December 2021, the US Federal Trade Commission (FTC) filed a lawsuit to block the deal on the basis that it would raise competition concerns.

The American federal agency said that the vertical deal will lead to one of the largest chip companies controlling the computing technology and designs that are depended upon by competitors to build their own competing chips.

In Europe and the UK, the deal was facing an in-depth probe by regulators for competition reasons.

With the deal collapsed, Arm will now begin preparations for a public offering within the fiscal year ending 31 March 2023.

SoftBank Group representative director, corporate officer, chairman and CEO Masayoshi Son said: “Arm is becoming a centre of innovation not only in the mobile phone revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase.

“We will take this opportunity and start preparing to take Arm public, and to make even further progress.”

Nvidia had announced the cash and stock deal to acquire Arm in September 2020 with an aim to build a premier computing company for the age of artificial intelligence (AI).

As per the terms of the deal, Nvidia was to pay $21.5bn in the form of its shares plus $12bn in cash to SoftBank. Additionally, under an earn-out construct, the Japanese group was entitled to get up to $5bn in the form of cash or shares, based on the meeting of certain financial performance targets by Arm.

The parties have agreed that SoftBank will retain the $1.25bn prepaid by Nvidia at the time of signing the deal, while the latter will have its 20-year Arm license intact.

Nvidia founder and CEO Jensen Huang said: “Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come. Arm is at the centre of the important dynamics in computing.

Though we won’t be one company, we will partner closely with Arm.

“The significant investments that Masa 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.”