Daily Authority: 💪 Nvidia walking away from Arm?

Late news this morning that Nvidia is saying that its deal to buy chip design giant Arm, the company renowned for its tech currently in most smartphones, the Apple A series and M series chips, is off.

  • It’s wild because although the initial price was $40 billion, the deal was hinged onto Nvidia’s stock price.
  • Therefore, even with recent market falls, Nvidia shares nearly doubled from the deal announcement back in September 2020. So for Arm-parent Softbank looking at $80 billion or so on the table, it remains a monster offer.
  • SoftBank bought Arm five years ago for $32 billion, by the way.
  • But the deal has been looking shaky for a while — back in early December, the Federal Trade Commission was suing Nvidia to block its purchase of Arm. That added to pressure, with the European Commission looking at the deal, and the UK’s antitrust watchdog, as well as a process for Chinese approval.
  • At that time in December, the FTC said: … “[we are] suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies.”
  • Indeed. Nvidia was a customer of Arm, and so Qualcomm, Intel, and Google all strenuously argued against the deal.

What’s happened:

  • Bloomberg reports: “Nvidia has told partners that it doesn’t expect the transaction to close, according to one person, who asked not to be identified because the discussions are private. SoftBank, meanwhile, is stepping up preparations for an Arm initial public offering as an alternative to the Nvidia takeover, another person said.”
  • That said, Bloomy also reported that “no final decisions have been made” by either Nvidia or Arm leadership.
  • SoftBank, who probably overpaid for Arm at the time, may prefer to just continue the process despite the difficulties, rather than go down the IPO route.
  • As I’ve pointed out before, shed no tears for SoftBank — apparently, it gets a $1.25 billion breakup fee, in cash, if the deal falls through, and keeps as much as $2 billion in total that Nvidia paid upfront.
  • What happens next will be fascinating… will Nvidia keep pushing? An Arm IPO? Another suitor for Arm?

Roundup

Chart Tuesday

  • Here’s the craziest thing — using OpenStreetMap data, the lighthouses of the world have been plotted, including color-accurate lights and if they blink or flash or are just ablaze all the time – and the gif here doesn’t do it justice:

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