Nvidia’s $40bn deal for the UK-based chip designer Arm is facing fresh problems in China, after it emerged that the disaffected head of Arm’s local joint venture controls almost 17 per cent of the unit.
Company registration documents reviewed by the Financial Times show that Allen Wu, the chief executive of Arm China, assumed control of a key investment firm in November last year, and now controls four out of six of Arm China’s shareholders.
Two of the companies controlled by Mr Wu have filed lawsuits in Shenzhen to protest that he was wrongfully dismissed by Arm and its main partner in the joint venture, the private equity firm Hopu, in June.
Removing Mr Wu, who continues to be in charge of Arm China’s day-to-day operations and holds the company chop, giving him legal authority for the business, is a major obstacle to Nvidia’s deal. One person close to Arm China’s board said he rated the odds of success for the deal at “only 50-50”.
Arm’s current owner, Japanese group SoftBank, put Eric Chen, the head of its China operations, in charge of negotiating an exit for Mr Wu, according to two people familiar with the process.
They said the discussions revolved around a potential payout of between $100m and $200m.
By September the two sides appeared to be near a settlement, with Mr Wu and Mr Chen separately telling colleagues that Mr Wu planned to leave at the end of the month, the people said.
Source: Financial Times
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