The intended merger of Nvidia and Arm has been set by controversy, and now the deal is dead in the water, the firm's new CEO said Arm is "well-positioned to grow going forward."
Nvidia announced the acquisition of Arm from SoftBank in September 2020. The agreement would have required Nvidia to pay SoftBank $12 billion in cash and $21.5 billion in Nvidia stock, with a further $5 billion secured under an earn-out clause.
At the time, Nvidia CEO Jensen Huang called the merger "complementary," adding that Arm would retain its branding, "open-licensing model, and customer neutrality."
However, the acquisition required regulatory approval from the US, EU, UK, and China to proceed – and has been fraught with problems ever since.
Read on: Nvidia seeking a way to complete tricky Arm acquisition
Nvidia has previously tried to soothe critics of the merger by pointing out its past history with competitors, including its collaborative work with Intel and AMD. However, this was not enough to salvage the deal.
On February 8, Nvidia and SoftBank jointly announced the termination of the deal "because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties."
The European Commission (EC) first raised concerns in October 2021 that the purchase could lead to eventual restrictions of Arm IP, causing ripple effects potentially including price rises and limiting competition.
After the EC launched an investigation, the UK's Competition and Markets Authority (CMA) followed suit and was ordered to conduct its own inquiry. In November 2021, Nvidia revealed that the US Federal Trade Commission (FTC) had also expressed concerns over the merger, and by December, the regulator had filed a lawsuit to prevent the acquisition from going ahead.
The FTC claimed that the deal would be anti-competitive. The regulator, among others worldwide, attempts to stop acquisitions and business practices that are seen as detrimental to competing forces on the market or those that could eventually restrict customer choice.
"The proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice," the FTC said.
Now the deal has dissolved, the companies have attempted to put a positive spin on the situation by announcing the appointment of Rene Haas as Arm CEO, taking over from Simon Segars, who has resigned, as well as revealing preparations to take Arm public.
At a press briefing on February 8, Haas said that he was "thrilled and humbled" to take on his new leadership role, albeit keeping in mind that the company is "disappointed" that the acquisition didn't go through.
An IPO date is set for within the fiscal year ending March 31, 2023.
Haas said that the version of Arm set to go public will be far closer to the "classic" version of the company that existed prior to its acquisition by SoftBank. This company was focused on IP licensing, and while this will be the case, the executive noted that Arm is a "far more diversified business" than before with an interest in compute and new technologies ranging from IoT to the automotive sector.
When queried about Arm's future, Haas said that the future looked "bright" even without Nvidia's resources and reach.
"We've had huge success improving our market share in the cloud, the data center, and in automotive," Hass commented, adding that the pivot to a "market-led approach" and removing unprofitable aspects of the business – such as video – has boosted the firm's position.
Arm is also intending to explore upcoming opportunities in IoT and the metaverse.
"I expect that we'll be using a lot of the same recipe going forward," Haas said. "I would say the opportunity for Arm has never been brighter. We're quite excited about the opportunity."
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