September 28, 2022

SoftBank plans to launch ARM’s IPO by 2023

Nvidia’s failure to acquire SoftBank’s Arm has put a lot of pressure on the Japanese conglomerate. The deal, originally announced in 2020, put a worth $66 billion on the arm – more than double what SoftBank paid for the British chip designer in 2016. The collapse of the sale forced SoftBank to seek an initial public offering (IPO) for Arm.

A controversial takeover timeline

Nvidia, the largest chipmaker in the United States by market capitalization, announced in September 2020 that it would acquire Arm for $40 billion as part of a multi-billion dollar push to expand into the booming semiconductor markets. The acquisition was expected to be completed by March 2022, where Nvidia would pay SoftBank $21.5 billion in stock and $12 billion in cash. Additionally, whether Arm has achieved certain financial goals. Nvidia agreed to pay SoftBank up to an additional $5 billion. The sale was subject to regulatory approval in China, the EU, the UK and the US.

The planned acquisition fell apart last week due to significant regulatory uncertainty, the companies said in a joint statement.

Masayoshi Son, Japanese business magnate and investor, founder and current CEO of Japanese holding conglomerate SoftBank.

Qualcomm, the leading mobile communications chipmaker, had raised a red flag over the deal. Other Arm customers were also concerned about the potential acquisition. Based in Cambridge, England, Arm makes technology that’s at the heart of most of the world’s smartphones, as well as products ranging from computers to cars. Arm offers both architectural licenses and “hard” IP licenses. This license allows its customers like Apple, AMD, Huawei, Intel, Qualcomm, and Samsung to build an Arm-compatible processor with a custom micro-architecture. The high-profile Nvidia-Arm deal was expected to generate a new stream of high-margin licensing revenue for the US chipmaker.

The wave of concern came after the U.S. Federal Trade Commission (FTC) sued for blocking the Nvidia-Arm deal for antitrust reasons. “The proposed vertical deal would give one of the largest chip companies control of computer technology and designs that rival companies rely on to develop their own competing chips,” the FTC said in a statement. December.

The purchase faced a lot of meticulous examination from the Competition and Markets Authority (CMA) in the UK and EU regulators on the grounds that the deal risked stifling innovation and harming competition.

SoftBank launches an IPO for Arm

SoftBank said the $1.25 billion deposit it received in connection with the sale is non-refundable and will be recognized as earnings in the fourth quarter of the fiscal year ending March 31, 2022. The Japanese conglomerate is currently launching an IPO listed on the tech-targeted Nasdaq stock market in the fiscal year ending March 31, 2023.

“The United States … that’s the market we look at when it comes to pricing Arm, and most likely,” Masayoshi Son, CEO of SoftBank Japan, said in a press briefing on Tuesday. “But wherever it is, the United States is in the market we’re looking at for Arm’s listing.”

Worryingly for shareholders, the Japanese conglomerate may struggle to break even on Arm’s IPO. SoftBank’s profit plunged 98% in the quarter through December as the value of its investments declined.