SoftBank Group (SBG)'s move to sell ARM, a major British semiconductor design company, is in trouble. Previously, SoftBank Group planned to sell its stake in ARM to Nvidia, a major U.S. semiconductor company, for up to $40 billion, but antitrust agencies in various countries such as the U.S. Federal Trade Commission (FTC) showed an increasingly harsh attitude towards the sale. It was originally planned to complete the sale by March 2022, but it has become difficult now.
SoftBank Group Chairman and President Masayoshi Son once planned to transform into an investment company through ARM sale
US Bloomberg reported on January 25 that Nvidia has entered preparations to cancel the acquisition plan. In the Tokyo stock market on the morning of the 26th, SoftBank Group's share price fell 2% from the previous trading day, setting a new low since last year. In the US stock market on the 25th, Nvidia's stock price also closed down 4%.
The agreement reached between SoftBank Group and Nvidia on the sale of ARM was in September 2020. It plans to acquire 6.7 to 8.1% of Nvidia's equity in combination with the stock exchange when selling all ARM shares for up to US$40 billion. In addition to Nvidia's equity, cash will be obtained. SoftBank Group acquired ARM for more than 3 trillion yen in 2016, so it was originally expected to receive sales proceeds.
SoftBank Group is advancing its transformation to an investment company with the activities of the investment fund "Vision Fund". Industrial subsidiaries will reduce the business risks they face by selling or reducing the investment ratio, and the sale of ARM is also in line with this overall strategy.
After reaching an agreement, Nvidia's stock price rose to more than twice compared with when the agreement was reached. For SoftBank Group, the transaction weight increased. SoftBank Group Chairman and President Masayoshi Son revealed at the November 2021 financial report press conference that, on the premise of obtaining Nvidia equity, generated a book income of about 5 trillion yen compared with the stock price at the time of reaching the agreement. Nvidia stock then fell by nearly 30%, but it still rose by 80% compared to when it was announced.
At present, the approval procedures of regulatory agencies in various countries are facing increasingly difficult situations. The Competition and Marketing Authority (CMA), the UK, where
ARM's headquarters is located, released a report in August 2021, saying that there were serious concerns about competition and announced an additional investigation in November of the same year. The executive body of the EU (EU) The European Commission also announced in October 2021 that it has initiated a comprehensive investigation based on the Competition Law (i.e., the Antitrust Law). The European Commission plans to conduct an investigation until March 15, 2022, to conclude whether to allow an acquisition.
The United States has a more severe attitude. In December 2021, the FTC, as a US regulator, requested the suspension of the acquisition under the Antitrust Act (Anti-trust Act), suing Nvidia and others. The lawsuit is expected to be launched in August 2022.
The authorities in various countries are worried that the new alliances created by Nvidia's acquisition of ARM will over-harvest strong power in the semiconductor industry.
ARM provides design licensing to many semiconductor-related companies around the world, and Nvidia's competitors also rely on ARM's technology. SoftBank Group has no direct competitive relationship with various semiconductor companies, so neutrality is not damaged, but if it is taken over to Nvidia, the situation may change.
, especially the US FTC is strengthening supervision of corporate mergers and acquisitions (M&A). Under the leadership of Chairman , Lina Khan, who is regarded as a pioneer in antitrust, expanded discretion compared with previous ones and proposed the idea of broadly integrating behaviors belonging to "unfair competition methods" into the target of supervision.
FTC pointed out in response to this situation that technologies such as semiconductors used for anti-collision and other automotive driving assistance, CPU ( central processing unit ) for data centers, etc., will hinder competition. It is also worried that Nvidia uses information from other competing companies obtained through ARM to take a negative attitude towards transactions that are not conducive to its own.
Take other companies as an example. The FTC requires the US Facebook (now Meta) to sell the operating department of the previously acquired image sharing APP "Instagram", etc.The lawsuit was filed in December 2020. Although it was rejected by the Federal District Court with insufficient evidence, it again submitted an indictment to amend some of the contents in August 2021. It shows a rare situation where the lawsuit continues.
For SoftBank Group, even if calculated separately by ARM, it will have a value of about 2.75 trillion yen as of the end of September 2021, but if the sale is not successful, the previously expected synergies will be hard to count. While it is possible to move forward again to the previously discussed ARM initial public offering (IPO), SoftBank Group will have to significantly adjust its strategy and the pace of transitioning to an investment company will become slow.
Nikkei Shimbun (Chinese version: Nikkei Chinese website) Azusaki Miyajima, Wata Osama
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