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Nvidia’s takeover of Arm under scrutiny

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Miguel A. Rodriguez
Miguel A. Rodriguez
19 November 2021
The long-announced takeover of Arm by Nvidia seems to encounter setbacks

On Tuesday, November 16, the U.K. government reported that it wants a full-blown investigation of the takeover of what is widely considered the crown jewel of the British tech sector – Arm.

Nadine Dorries, Digital and Culture Secretary, ordered a “phase 2” investigation into the $40 billion bid, which will be conducted by the Competition and Markets Authority (CMA) over the next 24 weeks, focusing on antitrust concerns and national security issues. The CMA revealed its “phase 1” examination brought to serious light concerns about the bid. The deal, which was expected to be closed before March 2022, is now unlikely to be completed before the deadline as regulators worldwide are scrutinizing the takeover. Last month, the European Commission launched its investigation into the deal.

Also, critics are concerned that the merger could restrict access to Arm’s “neutral” chip designs, leading to higher prices, less choice and reduced innovation in the industry.

However, Nvidia was quick to respond, stating: “We plan to address the CMA’s initial views on the impact of the transaction on competition. We will continue to work with the U.K. government to resolve its concerns. […] The phase 2 process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the U.K.”

Apart from the inquiry’s outcome, investors are looking for Nvidia’s fiscal Q3 2022 figures due after market close on November 17. Analysts are looking for an EPS of $1.11.

At the moment of writing, Nvidia stock price was trading about 0.37% lower.

 

Sources: cnbc.com, Investopedia.com

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books. 

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