Nvidia's proposed purchase of Arm for an estimated $40 billion in cash and stock was expected to have a difficult time winning the approval of regulators. It apparently could not, and the two companies called off the agreement on Monday night.
Nvidia and Softbank, which owned Arm, said that the proposed deal had been terminated. Softbank will keep a $1.25 billion prepayment, but will instead divest of Arm via a public offering rather than an outright sale. That IPO will take place sometime before Softbank's fiscal year ends on March 31, 2023.
The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties, the two companies said in a statement.
The proposed agreement became much more challenging when the Federal Trade Commission said in December that it would sue to block the deal, preserving competition for next-generation technologies. The proposed agreement would distort Arm's incentives in chip markets and allow the combined firm to unfairly undermine Nvidia's rivals, according to the FTC. The European Union had also indicated that it would try to contest the acquisition, as well, though its investigation was delayed, possibly due to staffing shortages caused by the pandemic.
The deal has also cost Arm chief executive Simon Segars his position, according to TechCrunch. Segars has resigned, and will be succeeded by Rene Haas, president of Arm's IP group as well as former general manager of Nvidia's computing products business.
In any event, the largest potential chip deal in history is now a memory, though Nvidia said that it would still continue to work with Arm as a customer. Nvidia, meanwhile, has reportedly begun hiring CPU engineers in Israel, presumably to counteract the loss of Arm's own resources.
Arm has a bright future, and we'll continue to support them as a proud licensee for decades to come, said Jensen Huang, chief executive officer of Nvidia, in a statement. Arm is at the center of the important dynamics in computing. Though we won't be one company, we will partner closely with Arm. The significant investments that Masa [yoshi Son, chief executive of Softbank Group] 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.