Bloomberg
Armistice with China’s CEO escalates, complicating sale of SoftBank
(Bloomberg) – The struggle for control of Arm Ltd. China’s business is on the rise with new lawsuits aimed at keeping the unit’s controversial CEO in power, further complicating SoftBank Group Corp’s efforts to sell the business to Nvidia Corp. The dispute erupted in June almost a year ago after the council voted to oust Allen Wu, CEO of Arm China, due to conflicts of interest, but he refused to leave. According to people familiar with the matter, the Chinese unit, which remains under Wu’s control, has filed a lawsuit against three senior executives who have appointed the council to replace him. It may take years to resolve previously unreported complaints, suggesting that Wu may remain entrenched. Wu fired the three men, including co-CEO Phil Tang, but they were subsequently reinstated by the board. According to the people, Arm China sued the trio in the new lawsuits and demanded that they return property from the company. It is said that the three managers caused the company ‘material damage’ and that they were terminated for legitimate reasons. Tang did not return requests for comment. Arm Ltd. declined to elaborate, saying he would not comment on pending lawsuits. The complex dispute has questioned the future of Arm, whose semiconductor technology is the most widely used smartphone worldwide and is increasingly used in computers. SoftBank founder Masayoshi Son has agreed to sell the British chip designer to Nvidia for $ 40 billion last year, but the road to completing the deal is becoming increasingly difficult. The dispute over China also raises questions about Beijing’s willingness to protect foreign investment in the world’s second largest. economy. Arm Ltd. sold a majority stake in the China unit to a consortium of investors, including Beijing-backed institutions. This hampered the efforts of the British firm to manage Arm China and Wu, which has support from local authorities in Shenzhen. Wu, a Chinese-born Chinese citizen, withdrew from signing ten-million-dollar settlement agreements if he were to leave the company, the people said, asking not to be identified and talking about lawsuits. At the same time, two minority shareholders in Arm China, which is linked to Wu, have filed lawsuits to block his dismissal on June 4, SoftBank said, negotiating with him last year and hoping they would make a decision. Instead, court battles are deepening and the Japanese company has soured over the increasingly complex dispute, the people said. According to one of the people, SoftBank has been thanked for initiating the lawsuit and there are no current negotiations with Wu. “We are going through a leadership change in China; it takes time to resolve, ”said Simon Ltd., CEO of Arm Ltd., in a recent interview with Bloomberg Television. “It is difficult. But we are confident that it will be resolved.” SoftBank and Nvidia declined to comment on the dispute in China. Poor China said in a statement that Wu’s position “is in line with legal registration” and is confirmed by China’s law and regulations. Read more: Arm takes aim at Intel Chips in Biggest Tech Revision in Decade The absence gives a relatively unknown extraordinary influence on one of the most important pieces of technology in the industry, in the world’s largest internet and semiconductor market. Chinese companies have unlimited need access to Arm’s products to continue the country’s efforts to make itself more independent of chip technology, an area where it is largely dependent on imports, in addition to resolving the stalemate, Nvidia and SoftBank also of Beijing needed to conclude their agreement, and it is unclear whether Wu’s presence would complicate it. is physically in control of the company stamp and registration documents. He refused to give them up and used the company’s funds to pay legal costs. committed in his attempt to fight his dismissal, the people said, according to China, the payment of legal costs’ in accordance with the e company policy and laws of China. and its regulations. According to people who spoke to him, it appears to be a large cash payment and immunity for subsequent legal action. In Arm China, which is responsible for selling licenses for its disk design and fundamental technology in the country, Wu told local staff he was not going anywhere. He recently gave Chinese New Year cash gifts in a red envelope with his surname on it. Poor China said the money came personally from Wu to show his appreciation to colleagues, a tradition during the Chinese New Year in the country. the three drivers are expected to take place at the end of May, one of the people said. Separately, two minority shareholders in Arm China sued the Chinese entity in Shenzhen to annul the board’s decision to oust Wu. The people said these two cases are now being merged, and hearings are scheduled for the end of April. Sun recently told investors in February he expects to end the sale of Arm and “I have no plan B.” part tries to make sure that the technology in China continues to penetrate despite US sanctions intended to limit the supply of US technology to large companies such as Huawei Technologies Co., while Arm is a British company, and part of its operations in the US are making products subject to control. The Chinese government has not stated its position on the Poor China leadership struggle, but the unit has several government-backed shareholders, including the sovereign wealth fund China Investment Corp. and the Silk Road Fund. In his interview with Bloomberg Television, The CEO of Arm Ltd., Segars, said that the postponement of ten months did not harm Arm’s business in China. The lack of travel for face-to-face meetings during the pandemic has prolonged the process of changing leadership in China, “he said when we announced the agreement in September, it would take about 18 months,” he said. “We remain confident in the timeline.” Visit us at bloomberg.com for more articles like this. Sign up now to stay ahead of the most trusted business resource. © 2021 Bloomberg LP