Sad news out of giant corporate merger land this evening as the $66 billion Arm Holdings acquisition by NVIDIA has collapsed under regulatory scrutiny and fear of a monopoly. Arm's technology is at the core of many consumer electronics devices we use every day, and the deal was viewed as anticompetitive by regulators and many other competitors in the semiconductor industry. Softbank, Arm's current parent company, has a plan to turn the lemon of a deal into some lemonade. An Arm Holdings IPO will instead be the way forward.
The original valuation of the NVIDIA deal for Arm Holdings valued the transaction at around $40 billion of combined cash and NVDA shares in September 2021. At the peak of NVIDIA's stock valuation in November, the deal was set to net Softbank almost $90 billion. As of today, the deal was still set to bring in close to $66 billion if it were able to close. The FT was the first to report the news of the collapsed deal, but they put everything behind a paywall over there.
According to several people close to the deal, NVIDIA abandoned the deal earlier on Monday. Apparently, NVIDIA even offered to maintain sales to Arm's other customers following the deal, and UK regulator did not agree it would be effective enough. The deal was largely viewed as anticompetitive by regulators, consumers, and many large tech companies. Some folks in the market may have been ahead of this news. NVIDIA (NVDA) shares are down 28% from the all-time high hit in late November 2021.
The good news today is that we all will hopefully have a chance to buy shares of Arm Holdings. This company is at the heart of so many amazing products and ecosystems, it will truly be one stock to immediately put on the old watch list. As for the timing of the IPO, or valuation, we have no idea. Softbank will be motivated to move, because they just lost out on one of the sweetest pay days in the history of technology mergers and acquisitions.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.