Nvidia falls nearly 5% as it reportedly prepares to drop $40B Arm bid
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Nvidia (NASDAQ:NVDA) shares remained down by almost 5%, Tuesday, after Bloomberg reported that the graphics chipmakers is "quietly" preparing to abandon its acquisition of U.K.-based chip designer Arm Holdings.
Citing people familiar with the matter, Nvidia has told partners it does not expect the deal to be finalized. It has received regulatory pushback, including in the U.S., where the Federal Trade Commission last month sued to block the deal on antitrust concerns.

After the lawsuit, Citi told investors that the odds of a deal being completed had declined to 5% from 30% prior to the lawsuit. The deal has also received regulatory obstacles in the U.K. and in China, where Arm has a joint venture with HOPU Investments.
As recently as November, Nvidia's (NVDA) Chief Financial Officer, Colette Kress, said the chipmaker was "committed: to the deal. "[Acquiring] Arm is a great opportunity for the industry and customers," Kress said. "We can assist in expanding ARM's IP [intellectual property]. We believe in the benefits of the acquisition."
In an email, a Nvidia spokesperson told Seeking Alpha: "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."
Wedbush Securities analyst Matt Bryson told Seeking Alpha that since the deal was announced, he believed regulatory approval was "unlikely." Bryson added that a successful deal would have been a "positive" for Nvidia.
While giving up on acquiring Arm would be a blow to Nvidia's (NVDA) pride, it wouldn't necessarily disrupt the chipmaker's future plans and direction.
Rob Enderle, director of technology research firm the Enderle Group, said that getting the necessary the approvals to buy Arm "would have likely placed massive restrictions on the combined company," and possibly forced Nvidia (NVDA) to divest part of the business they have already built over the years. Enderle said that even if it doesn't acquire Arm, Nvidia will be free to partner with the British company without any restrictions.
Enderle also said that even failing to acquire Arm gives Nvidia (NVDA) "the ability to effectively block any other buyer from restricting Nvidia's (NVDA) future access" to Arm's technology.
Neither Arm, nor its owner, Japanese conglomerate SoftBank (OTCPK:SFTBY), have yet responded for a request for comment.
Instead of selling Arm to Nvidia, SoftBank is reportedly prepping Arm to go public. SoftBank bought Arm for $31 billion in 2016.
Earlier this month, Nvidia discussed the benefits of the Arm deal in a filing with the Securities and Exchange Commission, saying it was originally approached by Arm owner, SoftBank, about a possible deal. Nvidia (NVDA) also said the proposed tie-up "represents a unique, once-in-a-generation opportunity to expand and enhance Arm ecosystem in critical markets."