SoftBank Acquires Full Ownership of Arm in $64 Billion Deal Ahead of IPO

Picture Source: Reuters

In a strategic move, SoftBank Group has acquired the remaining 25 percent stake in Arm, the chip designer, that it did not directly own from its Vision Fund unit. The transaction, which values Arm at $64 billion, is poised to be unveiled alongside Arm’s forthcoming stock market launch filing.

The specifics of the deal are set to be disclosed when Arm publicly files for its IPO, with details set to become public soon. Sources have requested anonymity due to the confidentiality of these discussions.

This development shifts SoftBank’s stance toward the upcoming initial public offering (IPO) of Arm. SoftBank is expected to retain a substantial stake, potentially as high as 90 percent, in Arm, a departure from the earlier plan to sell more shares in the IPO. Consequently, Arm’s capital raising from the IPO is projected to be less than the previously estimated range of $8 billion to $10 billion.

The valuation range for Arm’s IPO has been reported to be $60 billion to $70 billion, and the IPO is anticipated to take place in September. This move follows SoftBank’s acquisition of Arm in 2016 for $32 billion and the subsequent sale of a 25 percent stake to Vision Fund 1 (VF1) for $8 billion in 2017.

By acquiring the Vision Fund’s stake, SoftBank eliminates a potential post-IPO overhang on Arm’s stock. VF1 had planned to divest its stake over time after the listing, whereas SoftBank has signaled its intention to remain a long-term strategic investor.

The deal is not only significant for SoftBank but also a triumph for VF1’s major investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala. These investors had experienced losses due to SoftBank’s bets on startups that faced challenges.

Arm’s decision to go public is aligned with the gradual recovery of the US IPO market, which had faced a period of stagnation lasting nearly 18 months. This resurgence is evidenced by other companies like grocery delivery service Instacart and marketing automation firm Klaviyo also gearing up for IPOs in September.

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As the details of this strategic acquisition and Arm’s impending IPO emerge, industry stakeholders are keenly watching how SoftBank’s increased ownership will shape the trajectory of one of the world’s leading chip designers in the ever-evolving technology landscape.

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