(Bloomberg) -- Nvidia Corp. is abandoning its purchase of Arm Ltd. from SoftBank Group Corp., according to people familiar with the situation, bowing to regulatory opposition and ending what would have been the chip industry’s largest deal.

SoftBank now plans to proceed with an initial public offering of Arm, in lieu of the deal, according to the people, who asked not to be identified because the move isn’t yet public. 

Arm Chief Executive Officer Simon Segars has resigned, handing the job to President Rene Haas, according to the people. The move wasn’t related to the demise of the deal, one of the people said. Segars was one of Arm’s first employees and worked his way up through the ranks to become CEO in 2013. He continued to lead the company after it was acquired by SoftBank in 2016.

The Financial Times previously reported that the transaction collapsed on Monday. Last month, Bloomberg reported that Nvidia was preparing to wind down the deal. SoftBank and Arm are entitled to keep $2 billion that Nvidia paid at signing, including a $1.25 billion breakup fee.

Nvidia announced the acquisition in September 2020, aiming to take control of chip technology that’s used in everything from phones to factory equipment. But the $40 billion transaction faced opposition from the start. Arm’s own customers scorned the idea, and regulators vowed to give it close scrutiny.

The deal began to unravel after the U.S. Federal Trade Commission sued to block the purchase in December, arguing that Nvidia would gain too much control over chip designs used by the world’s biggest technology companies. The agreement also needed approval in the European Union and China, as well as the U.K., where Arm is based -- none of which appeared poised to clear the transaction. 

Arm’s value has always been its neutrality, something that SoftBank, which doesn’t compete with any of the technology’s customers, was able to maintain. When Nvidia announced the deal, analysts expressed concern that either its value would be destroyed by the change in ownership or opposition would scuttle its chances of getting signoff from governments around the world.

Bloomberg reported on Jan. 25 that Nvidia was quietly preparing to abandon the purchase. The Santa Clara, California-based company told partners that it didn’t expect the transaction to close. Still, some factions within the chipmaker had hoped to press ahead with a regulatory fight to win approval.

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