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SoftBank plans to take Arm public after Nvidia’s $66 billion takeover deal collapses

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SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son speaks during a press conference on November 6, 2019 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images

Nvidia‘s planned acquisition of Arm from SoftBank has collapsed due to “significant regulatory challenges,” the companies said in a joint release Tuesday.

The deal was originally announced in 2020 and had a value at the time of $40 billion in Nvidia stock and cash.

SoftBank said Arm will now prepare for a public offering within the fiscal year ending March 31, 2023.

Arm makes technology that is at the core of every smartphone processor, including Apple’s iPhones and Android devices running on Qualcomm chips. It counts nearly every major semiconductor company as a client.

The deal faced scrutiny since it was announced. Arm, a British company, is a neutral supplier to several competing tech giants. Qualcomm and Microsoft both use Arm’s main technology, its instruction set, and publicly opposed the deal.

In December, the U.S. Federal Trade Commission sued to block the transaction on antitrust grounds. Last year, U.K. competition authorities announced a probe into the sale.

Semiconductor and technology companies feared that if Nvidia owned Arm, it could favor its own business over its clients who may not have an alternative to ARM technology.

“The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips,” the FTC said in December.

SoftBank said the $1.25 billion deposit it had received as part of the deal is non-refundable and will be recognized as profit in the fourth quarter of the fiscal year ending March 31, 2022.

Arm was independent until 2016, when SoftBank Group bought it for $32 billion.

Nvidia previously said it expected the transaction to close this year.

Arm leadership change

Arm CEO Simon Segars has stepped down and has been replaced by Rene Haas with immediate effect.

“Rene is the right leader to accelerate Arm’s growth as the company starts making preparations to re-enter the public markets,” said Masayoshi Son, CEO of SoftBank Group.

Haas has served as president of Arm IP Products Group since 2017. Under his leadership, the company has focused on products for growing markets such as automotive.

Arm said in a statement that it is on track to achieve record royalty revenue, licensing revenue and profits in the current financial year, which ends in March.

Arm was founded in Cambridge in 1990 as a joint venture between several firms including Apple. It focused on low-power chips that gained new prominence in the past decade as the rise of smartphones meant that processor efficiency became increasingly more important than the superior raw processing power from chips made by companies like Intel.

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