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Nvidia Climbs; Citi Sees U.K. Regulator More Likely to Clear Arm Deal

Nvidia's proposed Arm deal was blessed by three key customers of Arm. Citi says that lifts the chances that the deal will pass regulatory muster.

Shares of Nvidia  (NVDA) - Get NVIDIA Corporation Report were climbing Monday after three of the world's largest chipmakers went against other big tech companies and blessed the graphics-chip specialist's proposed acquisition of U.K.-based Arm Holdings. SFTBY 

Broadcom  (AVGO) - Get Broadcom Inc. Report, Marvell  (MRVL) - Get Marvell Technology Group Ltd. Report and Taiwan's MediaTek have become the first Arm customers to publicly support the $40 billion proposed takeover. 

Analysts at Citi sees a "big step forward" in the three companies' support for the deal. They said this signals that U.K. regulators will probably end up clearing the acquisition. 

Citi now sees a 30% probability that the deal gets fully approved, up from its previous view of a 10% probability. 

Still, China stands as the biggest hurdle to the deal being approved, as the country is "less likely to support a deal that would see them potentially losing access to Arm," Citi analyst Atif Malif said. 

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Citi has a buy rating and a $720 price target on Nvidia. At last check the shares were rising 3.3% to $786.03. 

Read More: Qualcomm, Google and Microsoft Oppose Nvidia's Deal for Arm

The British government is looking at the Santa Clara, Calif., company's proposed purchase of the British chip designer from Softbank due to national-security concern.

Earlier this year, the U.K. Competition and Markets Authority invited third parties to comment on the merger ahead of a formal antitrust investigation. That investigation was to probe the deal's possible effects on competition in the U.K.

In February, U.S. federal regulators opened an investigation into the purchase while soliciting information from third parties. 

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