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The biggest chip deal in history has fallen apart

SoftBank has officially canceled its record-breaking sale of a coveted chip designer to Nvidia.

With an initial value of $40 billion, the acquisition of British design firm ARM by the US chipmaker would have been the largest semiconductor deal in history.

Regulators around the world, on the other hand, have long expressed reservations about the deal, which ultimately led to its collapse on Tuesday.

A statement from SoftBank stated that the transaction was unable to close because of "significant regulatory challenges." As an alternative, it stated that it would prepare ARM for an initial public offering (IPO) during the fiscal year that ends March 20, 2023.

During the signing ceremony, SoftBank had already received a $1.25 billion deposit in accordance with the terms of the agreement. According to the Japanese conglomerate, this payment was non-refundable and "will be recognized as profit" in the company's earnings for the three-month period ending March 31.

Apple (AAPL) and other major smartphone manufacturers rely on ARM processors to power their devices. Based in Cambridge, the company is widely regarded as one of the most successful technology companies in the United Kingdom. It employs approximately 2,000 people.

It was first announced in 2020, four years after SoftBank acquired ARM for $32 billion, at the time the world's largest foreign acquisition of a Japanese corporation.

When it was first announced, it was expected to close in 18 months, which would have coincided with this time period. This momentum was slowed when it became the subject of global regulatory scrutiny, which included examination by authorities in China and the United Kingdom.

An opinion piece published in the Chinese state-run tabloid Global Times a few days after the announcement described the move as "disturbing."

A recent opinion piece stated that "if ARM is acquired by the United States, Chinese technology companies will undoubtedly face significant market disadvantage."

In December, the Federal Trade Commission filed a lawsuit to prevent the merger from going through, claiming that it would stifle competition and give the combined company an excessive amount of control over chip design and technology. In addition, the European Commission launched an investigation into the transaction late last year.

The United Kingdom, the European Union, the United States, and China would all have had to give their approval for the transaction to go through.

The acquisition of Broadcom by Avago Technologies, which closed in 2015, would have been the largest transaction in the history of the semiconductor industry if it had been completed, according to Dealogic.

During SoftBank's (SFTBF) earnings presentation on Tuesday, Masayoshi Son, the company's CEO, expressed optimism about the future of ARM.

In addition to acknowledging the fact that his company is now shifting its attention to a "plan B," he stated that SoftBank had originally hoped to take ARM public following its acquisition by the company several years ago.

This, he explained, was a return to the original plan.

Although he did not support the deal, the billionaire lashed out at those who opposed it, claiming that opponents appeared "eager to block" an agreement that involved the merger of "two completely different businesses."

He claimed that Nvidia and ARM were "distinct companies," and that the case could be "the first case" in antitrust history to involve claims against two such "distinct companies." He compared the two companies to manufacturers of automobile engines and tires.

"Why do they feel the need to halt this transaction?" he inquired.

A new CEO has been appointed at ARM, replacing long-serving CEO Simon Segars with executive Rene Haas, according to a company announcement on Tuesday.

In a statement, Son expressed gratitude for Segars' 30-year tenure at the company and stated that "Rene is the ideal leader to accelerate ARM's growth at this time as the company prepares to re-enter public markets."

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