Goldman Sachs poised to lead U.S. IPO of SoftBank's Arm -sources

A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo
A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo, Japan, November 5, 2018. REUTERS/Kim Kyung-Hoon

March 24 (Reuters) - SoftBank Group Corp (9984.T) is planning to pick Goldman Sachs Group Inc (GS.N) as the lead underwriter on the initial public offering of Arm Ltd that could value the British chip designing company at as much as $60 billion, according to three people familiar with the matter.

The IPO preparations come after SoftBank's deal to sell Arm to Nvidia Corp (NVDA.O) for $40 billion collapsed last month because of objections from U.S. and European antitrust regulators. SoftBank has said it will now likely list Arm on Nasdaq by March 2023.

SoftBank interviewed investment banks for Arm's IPO in the last few weeks and asked them to commit to providing a credit line as part of their commitments, the sources said. It could not be learned how much Goldman Sachs offered for a credit line.

Bloomberg News reported last month that SoftBank was asking banks for an $8 billion margin loan tied to Arm's IPO stock.

The sources, who requested anonymity because the preparations are confidential, cautioned that SoftBank's plans were subject to market conditions and it may choose not to proceed with the deal. SoftBank, Arm and Goldman Sachs declined to comment.

SoftBank took Arm, whose technology powers Apple's iPhone and nearly all other smartphones, private in 2016 for $32 billion.

Arm's net sales surged 40% to $2 billion in the nine months to December amid high demand for chips, SoftBank has said. While this bodes well for the IPO, it may still not make SoftBank whole for the lost Nvidia deal in the short term. This is because a rally in Nvidia shares had led to Arm being worth more than $80 billion at one point under their cash-and-stock merger agreement.

"We will aim for the biggest IPO ever in semiconductor history," SoftBank founder Masayoshi Son told investors last month about Arm's listing. While SoftBank is likely to list Arm in the U.S., it is yet to finalize the venue of the flotation, the sources cautioned.

SoftBank announced a deal to sell Arm to Nvidia in 2020, but the U.S. Federal Trade Commission sued to block it late last year, arguing it would be detrimental to competition in nascent markets for chips in self-driving cars and a new category of networking chips.

The transaction also faced scrutiny from regulators in Britain and the European Union and had yet to receive approval in China.

After the deal was canceled, Arm appointed Rene Haas to replace Simon Segars as chief executive. An industry veteran, Haas joined Arm in 2013 and previously worked for seven years at Nvidia.

Arm licenses its architecture and technology to customers such as Qualcomm Inc (QCOM.O), Apple Inc (AAPL.O) and Samsung Electronics Co Ltd (005930.KS) that design chips for devices from mobile phones to computers.

Reporting by Krystal Hu in New York, Anirban Sen in Bengaluru and Sam Nussey in Tokyo; Editing by Bernard Orr

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media. Contact:+1 (646) 705 9409

Thomson Reuters

Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.