The British government is preparing a final campaign of flattery to persuade Arm parent Softbank to opt for a dual New York and London Stock Exchange (LSE) listing when the chip designer’s shares are floated later this year.
To seal the deal, UK Prime Minister Liz Truss and chancellor Kwasi Kwarteng are leading the efforts and will initiate talks with top brass at Softbank once the official period of mourning for Queen Elizabeth II ends next week.
Reg readers familiar with Truss, the one-time Secretary of State for International Trade, will perhaps be comforted by the local work she did for the pork and cheese industries, hoping she can transfer those skills to tech.
A loquacious source said to be close to Truss’s administration told the FT that securing part of the IPO would be seen as a “big and quick win” indicating the government’s seriousness about the future of the LSE.
The previous negotiating force dispatched by the British government to charm Softbank was led by Lord Gerry Grimstone, but he left the government following former PM Boris Johnson’s resignation. Former digital minister Chris Philp is reported to be linking up with Kwarteng to help out.
Softbank had agreed to sell Arm to Nvidia for $66 billion but the pair were unable to overcome regulatory hurdles and called it off. A multitude of rivals had moaned to competition watchdogs in the EU, US, UK and China about the potential consequence to the industry if Arm was owned by Nvidia.
Arm is the Switzerland of the tech industry in that it licenses designs to all chipmakers that are willing to pay. Nvidia may have changed things to its own advantage, at least that was the concern.
After the sale collapsed, SoftBank said it would take Arm’s stock public again.
SoftBank seems to be leaning toward a listing on the New York Stock Exchange, largely because businesses tend to have higher valuation when they float there – a point LSE chief exec Julia Hoggett previously dismissed.
“I want to win every single offering that I can and I also feel very strongly there is a compelling case for Arm to have a dual premium listing in the UK,” she said in July.
Union Unite is also keen to have a dual listing because it fears a NYSE may mean Arm’s global headquarters are relocated to the US and local jobs will be lost.
“Unite Cambridge Engineering branch supports the proposals for a joint listing of Arm on the London Stock Exchange and the NASDAQ in New York,” a spokesperson told us earlier in the summer.
“We would be concerned for the long term future of the company’s global HQ remaining in Cambridge if Arm lists exclusively in the USA and we will always fight to defend our members jobs in Cambridge.”
In the three months to 30 June, Arm reported turnover of $719 million, up 6 percent on the corresponding period of 2021. This included a $453 million contribution from chip royalties, itself up 22 percent a year. Earnings before income tax, depreciation and amortization grew 31 percent to $453 million.
Reg readers may remember the biting analysis Truss gave of Britain’s role international trade some years ago, and may be hoping some of that bulldog spirit feeds into talks with Softbank. ®