Nvidia (NVDA) shares slumped lower Tuesday amid reports that the chipmaker is ready to abandon its $40 billion takeover of U.K.-based Arm Holdings.
Bloomberg News reported Tuesday that Japan-based Softbank, which purchased Arm for around $32 billion in 2016, is looking to list the chip designing business as it grows increasingly concerned that regulators on both sides of the Atlantic, as well as in China, express concerns over the impact of the deal.
Britain's Competition and Markets Authority raised 'serious competition concerns', and called for an in-depth investigation into the $40 billion deal in August, while the U.S. Federal Trade Commission sued to block the deal in early December, alleging that the combined firm" would have the means and incentive to stifle innovative next-generation technologies, including those used to run datacenters and driver-assistance systems in cars."
“We continue to hold the views expressed in detail in our latest regulatory filings - that this transaction provides an opportunity to accelerate Arm and boost competition and innovation,” a Nvidia spokesman said when contacted Tuesday by TheStreet.
Nvidia called the Arm deal a "great opportunity for the industry" on its third quarter earnings call, but noted that it was being probed by the China Antitrust Authority as well as regulators in the U.S. and Europe.
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Despite these concerns and those raised by some Arm licensees, we continue to believe in the merits and the benefits of the acquisition to Arm, to its licensees and to the industry," CFO Colette Kress told investors on November 19. "We believe these concerns and those raised by some Arm licensees -- we continue to believe in the merits and benefits of the ongoing acquisition."
Nvidia shares were marked 5.4% lower in mid-day trading Tuesday to change hands at $221.15 each, a move that would still leave the stock with a six-month gain of around 14.7%.
Nvidia posted stronger-than-expected third quarter earnings in November and both gave an upbeat near-term outlook and a bullish take on developing opportunities in the so-called 'metaverse'.
Nvidia beat the Street by 6 cents with a third quarter bottom line of $1.17 per share, powered by a 50% year-on-year surge in overall revenues, to $7.1 billion, with stronger-than-expected tallies for both its gaming and data center divisions.
Looking into the final months of the year, Nvidia forecast revenues in the range of $7.2 billion, plus or minus 2%, while adding that its new Omniverse set of augmented reality software tools -- which support designers in the burgeoning 'metaverse' -- will eventually draw $1,000 a year from 40 million creators.
