It is not a very good time for SoftBank or its chief executive Masayoshi Son. Their first was the WeWork, then the pandemic, then the exit of Marcelo Claure and now this.
The Japanese conglomerate plans to list one of Britain’s most successful tech companies, Arm Holdings, in New York after a $66bn sale to Nvidia failed. But this has caused a political and corporate battle over the company’s future.
Masayoshi Son has expressed his disappointment for not being able to make the deal with the US chip heavyweight, Nvidia. They worked on this deal for 18 months but has decided to drop the sales and move on for IPO.
They are looking forward to floatation in the Nasdaq stock exchange, and the company members are also happy for this move, who hope that it could be used to exploit the semiconductor and computer demand.
But this US road has caused a serious uproar within the UK as they fear a loss of domestic tech champions. But this was not the condition when Son brought the company in 2016 for $32bn. The deal was done, after the Brexit referendum.
This move was hailed by then Prime Minister Theresa May, who hailed it as a sign of Britain’s attractiveness.
Another person who opposed this move was Hermann Hauser, the veteran European tech investor, who was involved in the founding of Arm 30 years ago. He spearheaded the campaign against what he described as “the creation of another American monopoly”.
He was against the SoftBank acquisition of the company. Presently he joined other prominent UK tech investors and entrepreneurs who cried foul at Arm’s sale to Nvidia. But they are concerned about the size of the local market to support the IPO.
But to keep such a company within the nation, there are moves for IPO floatation in the London stock exchange. The concern here is British market is considered to provide much lower-tech company valuations than the US.
Even though the government is keen on keeping the company within the UK, there is no plan yet to enact a formal mechanism to force the move.
The representatives of the London Stock Exchange are also discussing a move for dual listing, in both London and Nasdaq, an idea brought up by SoftBank.
The company suffered loss under SoftBank’s ownership, except in its royalty revenue. This rose over by 22% in the past nine months as 5G demand picked up and newer markets kicked in. They expect to exploit the demand for consumer chips through this move.
They expect to have more investment they received under SoftBank. They wish to use this deficit amount to invest in, automotive sector, which will power the so-called metaverse. They hope to replace the dominance of Intel chips in the big tech companies.
This might help Arm, but SoftBank’s problems remain unsolved.
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