Market News

Nvidia’s Takeover of Arm Faces Regulatory Delay in Europe – Report

Nvidia (NVDA) will likely not be able to meet its March 2022 deadline to complete its $40 billion acquisition of Arm Ltd., according to Reuters.

Shares of the multinational technology company designing graphics processing units for the gaming, mobile computing, and automotive markets were down 1.3% to close at $711.54 on June 15.

The delay is due to European regulators’ unwillingness to look into the deal before the end of the summer holidays.

The deal was first announced last year and led to an intense negative reaction from competitors like Qualcomm Inc (QCOM), Apple (AAPL), and others who were provided licenses to key Arm intellectual property.

The competitors were apprehensive that Nvidia would give itself preferential access to Arm’s innovations instead of equal distribution to all the players in the industry

However, both companies said that they will maintain “firewalls” to address industry concerns. (See NVDA stock analysis on TipRanks)

Fresh concerns arose again in April this year when NVDA announced that it will design a central processor chip for data centers with Arms to contest competitors like Intel (INTC) and Advanced Micro Devices (AMD).

The company has not yet filed an application with the European Commission to approve the deal as the regulator has mentioned that it needs until September to collect the necessary information required for the approval.

Meanwhile, The U.S. Federal Trade Commission has been collecting information related to the acquisition. Furthermore, an application for approval has been filed in China.

Per the terms of the deal, the completion deadline could be extended to September 2022.

NVDA’s management commented, “many jurisdictions have a pre-notification period, where the parties have a detailed and ongoing dialogue with regulators. Our discussions with regulators have been thorough and constructive. We’ll continue to work throughout the summer, as we anticipated all along, and expect to close in early 2022.”

After meeting with the company’s management this month, Oppenheimer analyst Rick Schafer maintained a Buy rating on the stock.

Schafer said told investors in a commentary note that the ARM acquisition is on track to close in the first half of 2022.

Overall, the stock has a Strong Buy consensus rating based on 26 Buys and 1 Hold. The NVDA average analyst price target of $730.50 implies 2.7% upside potential from current levels. Shares of NVDA have jumped 96% over the past year.

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