The UK Government might block Nvidia Corp’s acquisition of British firk Arm Ltd., citing concerns over potential risks to national security. The government is currently toying with the idea of preventing the $40 billion merger between the chip designing giant and its Brit contemporary, as per reports by Bloomberg News.
In response, Nvidia has said that it is working its way through the regulatory process in the country. Interestingly, the deal between the two companies has already been subjected to a stay order by Brussels, on behalf of the European Union.
Concerns Over National Security
The acquisition would see Arm, whose majority shares are currently owned by Japanese giant SoftBank Group, be transferred to Nvidia, in return for a significant amount of Nvidia shares going to SoftBank. Arm is a well-known name in the semiconductor chip market, and is reputed for its value in the smartphone industry.
The decision to block the deal rests with the UK government, after the country’s Competition and Markets Authority (CMA) submitted the findings of the 1st Phase of its investigation into the merger, on July 20. The assessment allegedly raised concerns over the United Kingdom’s national security, resulting in the prospect of preventing it from going through.
With this, the UK government may block, and will most likely delve deeper into, the Nvidia-Arm takeover, to check for any implications towards national security.
Many Hurdles to Cross
If things don’t pan out, the British chip maker might opt for a public sale of shares, even though Chief Simon Segars has strongly opposed any IPO, and has asserted that the same is not on the cards in the near future. In fact, Sears believes that merging with Nvidia will do Arm more good than an IPO, since he says that what his company needs is an “increased inflow of funding.” At the same time, Qualcomm, another market leader in the chip-making business, has also announced its plans to try and put in its money in Arm, should the deal with Nvidia fall through.
It seems like rather a long way until the deal between Nvidia and Arm will be finalized (if it gets finalized that is). That is because apart from the UK and the European Union, the two companies are also required to obtain regulatory clearance from the United States, seeing as how Nvidia is headquartered there. As such, it seems as no surprise that the deadline for regulatory approvals has been set at March 2022.
