The $40 billion transaction between Nvidia and Softbank over acquisition of processor designer Arm could be delayed by the European Commission which is yet to receive all the necessary documents from the U.S. GPU giant. If the approval is delayed significantly, Arm will be forced to consider an IPO.
Sources with knowledge of the Nvidia-Arm transactions told The Telegraph that if delays and rival obstacles turn out to be undefeatable, an IPO remains an option for Arm.
The European Commission, including the competition regulators, go to summer holiday starting Monday, July 26. So far, the EC has not even started reviewing Nvidia's takeover of Arm since the former has not yet submitted the required paperwork to the European regulators. The EC will go back to work in early September.
Nvidia is extremely interested in concluding the deal as it will make it a developer of highly-integrated datacenter and client platforms containing CPUs, GPUs, and DPUs (data processing units). Softbank is also interested in selling Arm to Nvidia as this will make it a major shareholder of the company. Arm's management is also interested in being a part of Nvidia as it would help it to avoid an IPO and focus on research and development rather than on short-term profitability.
Keeping in mind that everyone is interested in the transaction, it is very surprising that Nvidia has not submitted appropriate documents to the EC yet. Neither Nvidia nor Softbank commented on the story to The Telegraph.
Assuming that Nvidia submits its application to the EC by September, it will take the Commission six months or more to review the transaction and its impact on competition. In the best-case scenario, the EC will approve the takeover by March, 2022. Though, the best-case scenario is unlikely, according to experts.
"No regulator will allow itself to be pushed into a corner and having to make a decision in a timeframe it is not happy with," said Jonathan Branton, the head of DWF, a competition law firm.
When Nvidia announced its intention to acquire Arm from Softbank for $40 billion in a cash and stock transaction last September, it said that the deal would be completed in 18 months, by March, 2022, with an optional extension to September, 2022. So far, Nvidia has received no approvals from regulators in the U.S., the U.K., Japan, and China. The EC has not even started to review the deal.