Technology Deals That Failed to Get Regulatory Approval

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SoftBank announced on Monday the sale of chip designer Arm to Nvidia or as much as $40 billion (roughly Rs. 2,93,320 crores) in a deal set to reshape the semiconductor landscape.

The deal, which is subject to regulatory approvals including in Britain, the United States and China, will be putting a long-neutral technology vendor to Apple and others under the control of a single player.

It could face potential pushback from regulators, as the ongoing US-China tech spats have put any global deal in the semiconductor sector under much tighter scrutiny.

Below are a list of prominent global deals that collapsed due to regulators’ rejection in the last five years:

  • US President Donald Trump in March, 2018, blocked microchip maker Broadcom’s proposed takeover of Qualcomm on national security grounds.
  • Qualcomm walked away from a $44 billion (roughly Rs. 3,23,687 crores) deal to buy NXP Semiconductors after failing to secure Chinese regulatory approval in July, 2018 amidst China-US trade talks. China’s State Administration for Market Regulation (SAMR), the antitrust regulator reviewing the deal, did not respond to the companies after the deadline for the deal to expire passed.
  • Semiconductor equipment maker Lam in 2016 terminated its $10.6 billion (roughly Rs. 77,966 crores) deal to buy rival KLA-Tencor after the US Department of Justice told the companies it had serious concerns that the deal would harm competition.

Some global deals were able to get China’s approval after making some changes or concessions:

  • China approved Google’s $12.5 billion (roughly Rs. 91,941 crores) acquisition of Motorola in 2012 on the condition that Google keep Android free and available without discriminating against any particular device maker for five years.
  • China cleared Japanese trading house Marubeni’s $5.6 billion (roughly Rs. 41,185 crores) purch ase of US grain merchant Gavilon in 2013 with stiff conditions such as demanding the two keep separate, independent trading units when selling soybeans to the country.
  • Glencore in 2014 sold a $5.2 billion (roughly Rs. 38,234 crores) mining project in order to win China’s approval for its $30 billion (roughly Rs. 2,20,606 crores) takeover of miner Xstrata.
  • Nokia in 2015 had to combine its China business with former Alcatel-Lucent’s in the country for its EUR 5.6 billion (roughly Rs. 48,834 crores) merger with the French company to be approved by China. Beijing also stipulated that local telecoms groups could renegotiate rates on mobile technology patents borrowed from Nokia and Alcatel if they were ever sold on to a third party.
  •  China in 2017 conditionally approved chipmaker Broadcom’s $5.5 billion (roughly Rs. 40,458 crores) acquisition of Brocade Communications Systems.
  •  China approved HP’s $1.1 billion (roughly Rs. 8,091 crores) purchase of Samsung’s printer business with certain restrictions in 2017, citing concerns about the US firm’s dominance of the domestic laser printer market.
  • Bayer secured conditional approval from China’s commerce ministry for its $65 billion (roughly Rs. 478,142 crores) acquisition of the world No. 1 seed company Monsanto in 2018 after agreeing to offload certain assets.

© Thomson Reuters 2020

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