ARM’s China struggle threatens $40bn Nvidia deal

Business news |
By Peter Clarke

However, the Financial Times reports that Wu has taken control of four out of six investment companies with stakes in the joint venture and is arguing that the value has risen considerably over recent months. Despite indications that he was prepared to leave he remains in place and his presence could affect or prevent the proposed acquisition of ARM by Nvidia (see Opinion: Nvidia’s bad deal is not yet done and ARM sale to Nvidia agreed at $40 billion).

One assessment is that ARM China’s value has risen fivefold since its creation in 2018 to reach US$7.5 billion today. And reports indicate that Wu has support at least within some parts of the Shenzhen local government.

ARM, the IP licensor presently owned by Softbank Group, has been in dispute with Wu for several months and tried to sack him over allegedly inappropriate venture capital dealings and conflict of interest (see Report: VC dealings at heart of ARM’s China trouble).

In July it was reported that Wu had hired security to exclude ARM executives from premises (see ARM’s China boss has hired security to exclude executives). The Financial Times reports that he has also created an email filtering system so that ARM executives cannot make contact with staff.

According to the Financial Times ARM Ltd. (Hong Kong) owns 47.33 percent of its subsidiary. Amber Leading (Hong Kong) owns 36.0 percent and is controlled by private equity company Hopu. Four other companies, variously set up as repositories for Chinese investment and executive stock incentive schemes, amounting to 16.67 percent in aggregate are now controlled by Wu.

One sixth of $7.5 billion is $1.25 billion but it is not clear whether entities are being sought to buy out the four Wu-controlled companies.

As result of the dispute ARM and Nvidia have yet to make filings regarding the proposed acquisition with the Chinese regulators. This is because it has not got control of its subsidiary and cannot gain access to data, the reports said.

Related links and articles:

News articles:

ARM in struggle for control of Chinese subsidiary

ARM’s China boss has hired security to exclude executives

Opinion: Nvidia’s bad deal is not yet done

ARM sale to Nvidia agreed at $40 billion

Report: VC dealings at heart of ARM’s China trouble


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