Japanese conglomerate Softbank is gearing up to take British chip manufacturer public after its blockbuster $40bn takeover by American rival Nvidia collapsed.
The deal, which would have been the largest ever in the chip manufacturing industry, faced major regulatory pushback in the UK, Europe and the US on the grounds it would hinder competition in the sector.
In a statement today, Softbank said in coordination with Arm “it will start preparations for a public offering of Arm within the fiscal year ending March 31, 2023”.
The firm said: “The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties. Arm will now start preparations for a public offering.”
Masayoshi Son, Representative Director, Corporate Officer, Chairman & Chief Executive Officer of SoftBank Group Corp, said taking Arm public would allow it “to make even further progress.”
Speculation has begun circulating over where Softbank will look to list Arm, with political pressure already building for a London listing for the Cambridge-based firm.
Politicians view Arm as a national security asset due to the role it plays in global manufacturing, and the British regulator’s review of the Nvidia deal was extended last year to include national security considerations.
Anthony Browne, the Conservative MP for Cambridge South, where Arm is based told City A.M that it was vital that the UK was listed in London.
He told City A.M.: “Following the collapse of the Arm sale, it is vital that this leading British technology company be floated in London.
“Ownership matters, particularly when it comes to such a strategically important company and major employer, and as a nation we have historically been far too casual about such offerings.
“As a national asset and one of the last great European semiconductor companies, I would expect any flotation to be compatible with not only the interest of investors, but also our national interest.”
Russ Shaw, Founder of Tech London Advocates and Global Tech Advocates simialrly backed calls for a London listing and stressed the importance of domestic ownership of the firm.
“Businesses like ARM have a crucial role to play in sustaining the UK’s position as a leading player on the international tech and economic stages. We simply must protect our digital sovereignty by maintaining ownership of ARM – a jewel in the crown of our semiconductor industry.
“If Softbank’s aim is now to float ARM’s shares on the stock market by next year, then it is essential that it happens in the UK – and the London Stock Exchange becomes ARM’s new home.”
Rene Haas, head of Arm’s intellectual property unit, said no decisions had yet been made on where to list the firm, but the FT reported that Softbank favours a New York listing and would resist pressure from politicians.
The race for the listing comes as government ramps up efforts to project London as a global hub for tech firms to go public.
Government last year undertook a review of the UK’s listing regime to make it more attractive for tech firms, and Downing street last week hosted a range of high profile tech bosses as it eyes up another shake-up of listing rules.
Analysts say that Arm shunning a London listing would be a blow to goverment’s attempts to project the UK as a tech hub.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said: “If, as rumoured Arm reaches for a listing in New York, it may be seen as a vote of no-confidence for London, where newly listed ‘tech’ companies have had a distinctly rocky ride over the past year.
“If the UK’s largest home grown tech firms shuns London for New York it will be a major blow to London’s ambitions and will pile pressure on the government to speed up reforms.’’