SoftBank Plans To Sell Arm To NVIDIA For Up To $40 Billion Hits Antitrust Wall Across The Globe

SoftBank Group, whose CEO is Masayoshi Son, is seeking to sell British chip design company Arm. (Photo by Kei Higuchi)

SoftBank Group’s attempt to sell U.K. chip designer Arm to U.S. chipmaker Nvidia is hitting regulatory roadblocks in major markets, as the blockbuster deal has raised antitrust and national security concerns among policymakers.

The Arm sale is valued at up to $40 billion and is subject to approval by authorities in several jurisdictions, including Britain, China, the United States and European Union, SoftBank Group said.

The deal would attract the attention of antitrust regulators and national security officials in the countries where it needs to be approved, the deal has to clear regulatory hurdles set up to prevent anticompetitive practices and threats to national security.

While SoftBank Group’s acquisition of Arm went through without a hitch because the group is seen as “something of an investment company,” Nvidia’s purchase of the company will “heighten concerns that it would distort competition among downstream players that buy technology licenses from Arm,” lawyer Akira Kawashiro said.

Large chipmaker companies like Intel and Qualcomm are lobbying regulators in the U.S. and other countries to shoot down the acquisition. Regulators think there is a reasonable probability that the deal in question could hamper fair competition. In such cases, the companies may be required to pledge to not take discriminatory action against any other company or to take measures to address regulatory concerns, such as selling some businesses or assets.

The State Administration for Market Regulation (SAMR), could also get in the way of the deal as Arm owns 49% of Arm China. Arm China is a local joint company linked to the Chinese government.

In a statement about Nvidia’s planned acquisition of Arm published on a joint website, the two companies say, “With its proposed acquisition of Arm, NVIDIA will be able to turn new AI possibilities into realities much faster.”

Nvidia also promises to ensure that Arm will “continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success.”

The statement stresses that Arm will remain headquartered in Cambridge and build a world-class AI research facility.

NVIDIA said in a statement that under the deal it will pay SoftBank $21.5 billion in common stock and $12 billion in case, $2 billion of which will be payable at signing.

SoftBank may receive up to another $5 billion in cash or stock, dependent on Arm’s performance.

And NVIDIA will also issue $1.5 billion in equity to Arm employees, for a deal worth a total of up to $40 billion.

There is still much uncertainty about the outlook for the deal. Clearly, however, selling Nvidia’s acquisition of Arm to regulators and customers requires a well-designed public relations strategy as well as a convincing argument.