Jan 25 (Reuters) - Nvidia Corp (NVDA.O) is preparing to abandon its purchase of Arm Ltd from SoftBank Group Corp (9984.T) after offering about $40 billion for the British company in 2020, Bloomberg News reported on Tuesday, citing people familiar with the matter.

Nvidia has told partners that it does not expect the deal to close, while SoftBank is stepping up preparations for an initial public offering (IPO) of Arm, the report said.

"This transaction provides an opportunity to accelerate Arm and boost competition and innovation," an Nvidia spokesperson said. Arm and SoftBank did not immediately respond to Reuters requests for comment.