Arm goes for US-only listing, but is Bristol bound
Despite protracted talks with the Financial Conduct Authority processor intellectual property licensor Arm Ltd. has said it intends to pursue a US-only stock market listing this year.
The development is a blow to the London Stock Exchange (LSE) and to Prime Minister Rishi Sunak who had both lobbied to try and persuade Arm’s owner SoftBank Group to go for a dual-listing (see UK Prime Minister lobbies for Arm’s London listing).
However, the company has pledged to keep its headquarters, operations and material intellectual property in the UK and said it is planning to open up in Bristol, to complement its Cambridge operations. The company’s CEO, Rene Haas, is also reported saying that Arm intends to consider a subsequent UK listing “in due course.”
Haas said Arm would provide more details of the Bristol site in coming weeks.
Talks with the FCA reportedly included relaxation of the rules for listed companies and were part of attempts to make the LSE a more attractive location for listings and IPOs. However Japanese company SoftBank is expected to retain a significant share of Arm when it lists and it is thought it did not find the concessions sufficiently attractive.
“After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” said Haas.
It would appear that SoftBank believes the US will help it achieve the best value for whatever portion of Arm it offers to the public if that offer is unencumbered by a lower opinion of Arm’s value in London and the tougher economic climate that may persist in Europe.
Arm was dual-listed on the New York Stock Exchange and London Stock Exchange until it was acquired by SoftBank for about $32 billion in July 2016. SoftBank has now opted to relist Arm after it failed to sell the company to Nvidia Corp. early in 2022. This was mainly due to regulatory resistence from the UK and other authorities.
Unfortunately for SoftBank the financial climate for IPOs in the west has declined substantially with very few getting away in 2022 and valuations being considerably lower than previous expectations.
SoftBank has now given itself until the end of the calendar year – or even the financial year – to float Arm in a deal that is expected to value the company at between US$30 billion and US$70 billion.
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