SoftBank Group has acquired the 25 percent stake in Arm it does not directly own from its Vision Fund unit in a deal that values the chip designer at $64 billion (nearly Rs. 5,32,350 crore), according to people familiar with the matter.
Details of the transaction will be unveiled on Monday when Arm makes public the filing for its blockbuster stock market launch, the sources said, requesting anonymity as these discussions are confidential.
SoftBank is now expected to sell fewer Arm shares in the initial public offering (IPO) and would likely be retaining a stake of as much as 90 percent in the company, according to the sources, adding that Arm’s capital raising from the IPO would be less than the range of $8 billion (nearly Rs. 66,550 crore) to $10 billion (nearly Rs. 83,180 crore) it was earlier planning.
SoftBank is currently in talks to list Arm at a valuation of $60 billion (nearly Rs. 4,99,100 crore) to $70 billion (nearly Rs. 5,82, 250 crore) in the IPO, which is expected to happen in September, Reuters has previously reported. SoftBank, which took Arm private for $32 billion (nearly Rs. 2,66,170 crore) in 2016, sold a 25 percent stake in the company to Vision Fund 1 (VF1) for $8 billion in 2017.
The deal removes a potential overhang for Arm’s stock following the IPO, because VF1 had initially planned to cash out its stake in the stock market over time following the listing, while SoftBank has indicated it will remain a long-term strategic investor.
Reuters was first to report earlier in August that SoftBank was in talks to buy the stake from the Vision Fund. The Wall Street Journal reported the financial terms of the deal earlier on Friday.
The deal also delivers a major victory for VF1’s biggest investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala. They nursed losses after many of SoftBank’s bets on startups such as workspace provider WeWork Inc and ride-sharing firm Didi Global soured.
Arm’s plans to go public come as the US IPO market shows early signs of a recovery after a barren spell that lasted a year and a half. Grocery delivery service Instacart and marketing automation firm Klaviyo are also expected to go public in New York in September, the sources said.
© Thomson Reuters 2023
