- GeneralM&A
- August 21, 2021
- 5 minutes read
Antitrust: UK Objects To Nvidia’s $40B Arm Acquisition
The antitrust agency of the UK government is challenging the acquisition of Arm Holdings, a chip designer, by American chipmaker…
The antitrust agency of the UK government is challenging the acquisition of Arm Holdings, a chip designer, by American chipmaker Nvidia. It’s a significant challenge given that Arm is headquartered in the UK and could see the deal stalled as a result.
- Nvidia is in the process of buying Arm for the sum of $40bn. It signed a binding agreement for that last September.
- In a statement, the UK’s Competition and Markets Authority (CMA) said Nvidia buying Arm raises “serious competition concerns.” The agency says its main concern is Nvidia restricting access to Arm’s intellectual property by its rivals if it gets hold of the company, which seems to be a valid concern given Nvidia’s major rivals license Arm’s chip designs to make their chips.
- The UK government also noted concerns of loss of competition that could lead to more costly or lower-quality chip products in the industry if Nvidia absorbs Arm Holdings.
- To address the concerns, Nvidia offered the UK’s antitrust agency a behavioral remedy, legal speak for refraining from certain conducts which in Nvidia’s case is preventing access to Arm’s IP by its rivals, but the agency said that wasn’t enough to cool down its concerns.
- Now objecting to the acquisition, the UK’s antitrust agency says it warrants greater scrutiny by the country. At that, the UK Secretary of State will decide if the deal will require an in-depth investigation on both competition and national security grounds by the country’s government, or handed back to the CMA to be probed on competition grounds only.
- Nvidia’s proposed Arm acquisition is one of the chip industry’s biggest deals as of late, so it’s certain that it’ll see major scrutiny from antitrust agencies around the globe. What’s not certain is if the scrutiny will rise to a point where Nvidia has to back out from the deal.
- Nvidia is buying Arm Holdings from SoftBank, a Japanese tech conglomerate that bought Arm for $32bn in 2016. Nvidia will pay SoftBank $21.5bn in stock, $12bn in cash, and reserve $5bn in cash or stock for conditional earnouts. It’ll also issue $1.5bn in equity to Arm employees, summing up to $40bn.
