The Japanese group Softbank has set the price of the public sale offer of up to 10% of the capital of the microprocessor firm Arm at $51 per share, as announced by Arm itself in a statement. Given the strong demand from investors, the price is at the upper end of the indicative and non-binding band between 47 and 51 dollars that it had initially announced. It implies a company valuation of just over $52.3 billion. When the securities it has yet to issue for executive compensation and other commitments are taken into account, the implicit valuation would be about 54.5 billion dollars (about 50.7 billion euros).
Initially, Sofbank had even considered placing the price above the expected band, at $52 per share, but in the end it preferred to hold back after the meeting with the advisory banks. The IPO is the largest in the United States since electric car maker Rivian two years ago.
Softbank, which controls 100% of the company, initially places 95.5 million securities, equivalent to 9.4% of the capital. This figure may increase by another 7 million titles if the planned oversubscription option is exercised, in which case the placement would amount to almost 10% of the capital and Softbank would earn a total of 5,227 million gross dollars from the operation, to which deduct expenses and commissions.
Advanced Micro Devices (AMD), Apple, Cadence Design Systems, Google, Intel, MediaTek, Nvidia, Samsung, Synopsys and TSMC Partner have expressed interest in acquiring up to $735 million in shares in the deal, Arm said in the prospectus. .
SoftBank paid $32 billion to acquire Arm in 2016. Then, pressure from regulators thwarted the company’s sale to Nvidia, agreed in 2020 for $40 billion. The Japanese group had planned to take Arm public since that sale failed and now it benefits from the investment fever for securities related in one way or another to artificial intelligence.
Intel, AMD, Nvidia and Qualcomm are among the companies that use the British technology company’s designs to develop their products. The company estimates that “approximately 70% of the world’s population uses Arm-based products,” according to the operation’s prospectus. Thanks to the low energy consumption and the power of the chips it designs, they are perfect for smart mobile phones, where their position is almost a monopoly. As that market is a bit in the doldrums, the company is betting on other segments such as cloud computing and the autonomous car.
Arm’s sales fell slightly (from $2,703 million to $2,679 million) in the fiscal year that ended March 31, precisely because of the decline in smartphone sales. Profit fell 4.5%, to $524 million. At the start of the year, sales have fallen 2.5%, to 675 million dollars and profit has fallen 54%, to 105 million dollars, in the quarter closed on June 30, always according to the data from the placement brochure.
Barclays, Goldman Sachs, JP Morgan and Mizuho act as global coordinators of the operation. Among the thirty banks participating in the IPO is the Spanish Banco Santander, which is one of the main underwriters through its subsidiary Santander US Capital Markets.
