NVIDIA has sought European Union antitrust approval for the $40 billion acquisition of chip designing company ARM. This could kickstart an antitrust probe which may become an obstacle for the company’s plan to close the deal by early 2022.
According to the European Commission filing, the initial deadline to rule on the transaction has a deadline of 13th October. The regulators are likely to echo worries similar to those voiced by the UK watchdog last month.
The competition watchdog of the United Kingdom has warned that the deal could damage competition and weaken rivals, and required a further lengthy investigation. The acquisition also needs approval from the U.S. and China.
The deal must be completed by September of next year, or NVIDIA would have to pay SoftBank $1.25 billion.
In a statement related to this, NVIDIA said, “We are working through the regulatory process and we look forward to engaging with the European Commission to address any concerns they may have. This transaction will be beneficial to Arm, its licensees, competition, and the industry.”
With criticism surrounding the deal, the EU is likely to extend its review by at least another four months to examine potential competition concerns. The company had originally planned to complete the deal by March 2022, when the acquisition was announced.
For the uninitiated, NVIDIA, the world’s biggest graphics card and AI chips maker announced the acquisition of ARM last year. As a part of the deal, NVIDIA will be paying 12 billion US Dollars in cash, which includes 2 billion US Dollars payable at signing and giving out 21.5 billion US Dollars worth of NVIDIA’s stock to SoftBank.
SoftBank had acquired ARM back in 2016 for 31.4 billion US Dollars. ARM is a known chip designer with its architecture being one of the most popular designs used in most smartphone chips from companies like Qualcomm, Apple, and even certain Intel chips.
Companies like Qualcomm, Samsung, and Apple are opposing the acquisition while some other companies, including Broadcom, MediaTek, and Marvell are in support of the deal.
To ensure that the deal gets approval, NVIDIA has promised that it will maintain open licensing and that the deal will help ARM, its licensees, and the industry. Antitrust officials rarely approve “behavioral commitments” without a more careful review due to the difficulty of checking how a company will keep its promises.
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