Even if the announcement by the graphics card manufacturer NVIDIA that it wanted to take over the chip group ARM was already more than six months ago, the acquisition has not yet been advanced. The main reason for this are competition authorities who are resisting the deal. NVIDIA CEO Jensen Huang was now surprisingly optimistic.
• NVIDIA announces multi-billion dollar takeover of ARM
• Authorities and competitors resist
• Acquisition dry this year?
NVIDIA is spending $ 40 billion on ARM
In September last year, the graphics card specialist NVIDIA announced that it would take over the chip manufacturer ARM . The company is expected to change hands for $ 40 billion . ARM is currently still in the hands of the Japanese Softbank, which only bought the group in 2016 and took it off the stock exchange, as reported by the Deutsche Presse-Agentur. The purchase amount consists of NVIDIA shares valued at $ 21.5 billion and cash of $ 12 billion. If certain success targets are met, NVIDIA Softbank will also pay an additional $ 5 billion. ARM employees can also receive NVIDIA stock, valued at $ 1.5 billion. According to the Bloomberg news agency, the Japanese company will receive $ 2 billion if the deal goes through.
Headwinds from authorities and competing companies
However, not much has happened since the autumn announcement. Resistance came mainly from competition watchdogs, who have to agree to the takeover. According to t3n, the relevant institutions in Great Britain, China, Japan and the USA must approve the takeover, as the companies involved are based there. And there was actually headwind from Great Britain recently: Oliver Dowden from the British Ministry of Digital Science announced in April an intervention in the public interest that he wanted to carry out with regard to the ARM acquisition. For example, he informed the country’s competition and market authorities in writing of his decision and called on them to initiate a “phase 1” investigation to evaluate the transaction, as can be read on the British government’s website.
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And Chinese technology companies such as Huawei are said to have expressed their concerns about the merger to the Chinese market regulation authority. It is currently unclear whether the ARM acquisition will actually be carried out. Analyst Carolina Milanesi also recently emphasized the uncertainty of the situation. “The chances are currently 50 to 50,” she told ARD in March. “There is a lot of concern in the industry. Unfortunately, the concerns come from companies that are considered monopolists themselves.”
Will the acquisition be completed in 2021?
However, NVIDIA’s CEO Jensen Huang is much more optimistic. At the Computex conference in Taipei in early June, he said that despite growing skepticism about their prospects, he was confident that the takeover would be a success, Bloomberg reported. The approval of the authorities will probably take place in the course of the year, but no later than 2022, said Huang. “I expect that this will take 18 months, that is later this year or early next year. I am confident about the transaction,” the agency quoted the CEO as saying. “Our companies are complementary, so we will inherently bring innovations that result from companies coming together and offering complementary things.” An earlier takeover also took a year and a half,
NVIDIA and ARM “complementary”
Nevertheless, Huang takes the concerns of the authorities and competitors seriously, as he emphasized at the virtual conference. “The regulatory authorities are checking: Is this good for competition? Is it promoting competition and bringing innovation to the market? Are there more customers to choose from, are there more offers and more options for customers?” The company can dispel these concerns: “You can see that our companies are in principle completely complementary,” Huang finally assured.
Nevertheless, the takeover is not yet dry. And a court case in which the Chinese ARM location is involved does not exactly simplify the tense situation. As early as June 2020, Allen Wu, who holds the executive position, was voted out of the company due to a conflict of interest, according to Bloomberg. Instead, the board has hired three employees to manage the Chinese unit. Despite this decision, Wu refused to vacate his seat – and has now filed a lawsuit against the three executives.
