Nvidia’s $40 Billion Deal for Arm Faces U.K. Merger Review

(Bloomberg) -- Nvidia Corp.’s proposed $40 billion takeover of Arm Ltd., the U.K.’s most valuable tech company, is set to be investigated by the country’s competition watchdog in its first major probe since Brexit.

It’s the first global transaction to get British scrutiny since the Competition and Markets Authority emerged from the shadow of European Union regulators a week ago. The CMA has already pledged to push for tougher examinations of tech deals.

Nvidia agreed to buy SoftBank Group Corp.’s Arm for $40 billion, taking control of some of the most widely used electronics technology in the semiconductor industry’s largest-ever deal. Nvidia has said it will keep Arm’s headquarters in the U.K. and invest in a new facility to push forward artificial intelligence research, educate customers and provide a place for experimentation in robotics and automation.

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” Andrea Coscelli, chief executive of the CMA, said in a statement Wednesday. “We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products.”

While the responsibilities of the CMA will be limited to the competition aspects of the transaction, the U.K. government has already signaled it wants guarantees on the numbers of staff to be maintained. The U.K. agency will initially consider whether Arm would raise prices or hurt licensing services to Nvidia’s rivals after the transaction.

Santa Clara, California-based Nvidia said that it had always expected the regulatory process to take about 18 months and it “won’t be providing comment on milestones along the way.”

Officials at Softbank and Arm declined to comment.

The CMA said it is seeking comments on the effects of the deal, before it starts a formal investigation later this year.

Arm’s neutral position as a supplier at the heart of the chipmaking industry means the deal has already raised concerns, because Nvidia directly competes with Arm’s customers such as Qualcomm Inc., Intel Corp. and Advanced Micro Devices Inc.

But Nvidia boss Jensen Huang has argued that his deal will aid technological development, saying Nvidia’s artificial-intelligence capabilities can be combined with Arm’s technology to help customers even more.

In addition to European and U.S. regulators, the Arm purchase will face a serious review in Beijing. Chinese technology companies including Huawei expressed strong concerns to local regulators about the deal, Bloomberg News reported in October.

In a separate document Wednesday, the CMA said it is already looking beyond the Nvidia deal.

The CMA said its in discussions with “a number” of other companies pursuing mergers. Deals that were traditionally under the purview of the European Commission can be separately investigated in the U.K. and the agency has said it expects its caseload to climb around 40% from the prior year.

(Updates with Nvidia comment in sixth paragraph.)

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