Nvidia’s $40 billion Arm acquisition in doubt

Could an IPO be in the offing?

Nvidia’s troubled acquisition of British chip designer Arm has seemingly hit a roadblock, with reports suggesting the deal is no longer expected to close.

According to Bloomberg, Nvidia has notified partners of stalled progress, while SoftBank, Arm’s current Japanese owner, is thought to be making preparations to take the company public via an initial public offering.

The proposed acquisition had come under increased scrutiny from regulators in recent months, amid concerns of stifling competition and restricted access to chip designs used by numerous companies around the world.

Despite repeated assurances from Nvidia, the UK government ordered a full investigation of the deal on competition and national security grounds. The EU and China are also scrutinising the deal, while over in the States the Federal Trade Commission is suing in an effort to block the acquisition entirely.

Although Bloomberg insists no final decisions have been made, the leak comes just days after Hermann Hauser, who helped spin-off the Cambridge-based chip designer from Acorn, suggested that Arm could list as a standalone company with some of its largest customers taking stakes.

The deal is now worth more than the initial $40bn. As part of the original agreement, $21.5bn of the fee was made up by Nvidia’s stock at the time of signing. Though recent stumbles have nipped hundreds of billions off Team Green’s share price, the current valuation still puts the acquisition well north of $50bn. There will be a large cohort inside SoftBank wanting to the deal to go through for this reason alone.

Despite the challenges, both Nvidia and Softbank have not publicly changed their stance. In a statement to Bloomberg, a SoftBank spokesperson said: “We remain hopeful that the transaction will be approved.” Nvidia spokesman Bob Sherbin adds: “We continue to hold the views expressed in detail in our latest regulatory filings – that this transaction provides an opportunity to accelerate Arm and boost competition and innovation.”