san francisco The sale of the chip designer Arm to the US group Nvidia is off the table. Arm owner Softbank officially announced the failure of the multi-billion dollar deal on Tuesday. Several competition authorities had previously expressed their concerns. According to insiders, Arm is now planning to go public.
At the same time, the Japanese technology investor made a significant drop in profits public. From October to December, Softbank profits fell to the equivalent of 220 million euros from 8.87 billion euros in the same period last year. The decline was mainly due to a weaker portfolio of the Vision Funds, which dominate the business.
The stock market valuations of companies such as the office broker WeWork, the transport service provider Grab or the online used car dealer Auto1 from Berlin fell below the issue price in the quarter. In addition, increasing regulation in the People’s Republic of Alibaba and other technology stocks in which Softbank is involved.
In 2020, Nvidia submitted an offer of 40 billion dollars, the equivalent of 35.5 billion euros, for the chip manufacturer. Regulators around the world fear that Nvidia – already a giant and maker of the main graphics cards – could gain an unfair competitive advantage in the semiconductor industry through the purchase.
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Arm plays a key role in the chip industry. The company develops chips that are particularly energy-efficient. The chips in almost every mobile device in the world are based on Arm’s design.
Nvidia’s rating had recently risen sharply. With a market capitalization of around 620 billion dollars, Nvidia was the seventh most valuable company in the USA on Monday, ahead of Facebook’s parent company Meta, which had recently lost a lot of value.
CEO Simon Segars is said to be losing his job at ARM over the failure of the deal with Nvidia, the Financial Times reported. He will be replaced by Rene Haas, head of the intellectual property department. If the takeover fails, Softbank could be owed $1.25 billion in compensation. Neither Nvidia nor Arm could be reached for comment. For weeks there had been speculation that the deal would fail.
Arm could return to the stock market
Softbank will attempt to list Arm after the sale fails, Bloomberg reported. Several politicians have already commented on this in Great Britain. “Arm is a leading UK technology company of national strategic importance and a key local employer,” said Anthony Browne, Conservative MP for Cambridge South. “If the company goes public, it should be done in London and not in New York or anywhere else.”
Conservative MP Damian Green said: “Arm Holdings is a world-leading British company that should remain British. I would very much hope that – if anywhere – it gets listed in London.”
Japanese company Softbank bought Arm in 2016 for £24 billion. Prior to the purchase, Arm was listed on the London Stock Exchange. Should Arm return to the London Stock Exchange, it would be one of the most valuable companies in the country.
More: Nvidia’s $40 billion deal is about to end