Nvidia’s $40bn takeover of UK chip designer Arm collapses

Nvidia's $40bn (£29.6bn) takeover of the Cambridge-based Arm has collapsed due to insurmountable regulatory hurdles, leaving the British chip designer to seek a stock market flotation in the next year as an alternative.

The deal, which would have been the largest in the semiconductor industry, had become mired in red tape on both sides of the Atlantic and in China and had also faced fierce opposition from players within the industry since it was announced in September 2020.

Japan's Softbank acquired Arm - which has more than 500 clients that use its chip designs, including Apple, Samsung and Google, in products ranging from iPads and mobile phones to cars and smart TVs - for $32bn in 2016.

In a joint statement, Softbank and Nvidia said they had decided to terminate the deal due to "significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties".

The cash and stock deal was worth about $40bn when it was announced 18 months ago, but has dramatically increased to as much as $75bn as Nvidia's share price has soared.

Softbank moved quickly to announce it is to revert to its backup plan of an initial public offering to cash in on Arm, and will receive a $1.25bn break-up fee from Nvidia.

The chip designer, which employs 6,500 staff including 3,000 in the UK, also announced a management shake-up with the chief executive, Simon Segars, replaced by Rene Haas, head of Arm's intellectual property unit who previously worked at Nvidia for seven years, to lead the publicly listed company.