UK-based chip designer Arm went public for the second time in its history, last week. Running the artificial intelligence wave, the company priced its initial public offering at $51 a share. The company plans to sell about 10% of the company at a valuation of over $54 billion. At a share offering of $5 billion, Arm IPO was touted to be the biggest IPO of the year.
Following are the major highlights leading up to the chipmaker’s IPO in 2023.
Arm goes public for the first time
Founded in 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology, ARM was then known as Advanced RISC Machines Limited. It took the company eight years to go public.
By the end of 1997, the company was a private business worth £26.6 million with a net income of £2.9 million. On April 17, 1998, Arm Holdings PLC completed a joint listing on both the London Stock Exchange and Nasdaq with an initial public offering at £5.75. The decision to get listed on both two stock exchanges for two reasons. Firstly, since two major shareholders in the company were American and English. Secondly, Arm wanted to bank on the tech bubble of the time which was prevalent in the USA to gain higher valuation.
Softbank buys Arm, makes it private
In July 2016, Japan-based Softbank agreed to acquire Arm in a deal worth $32 billion. Softbank had then said that this deal would help it bolster its presence in the up-and-coming internet of things (IoT) sector of that time. The investment holding firm agreed to pay £17 per share. It was one of the biggest tech deals that year and the biggest ever in the UK.
The deal was finally completed in September of that year post all regulatory clearance. The acquisition also meant Arm would now be a private company and would operate as a standalone business. As a result, it was delisted from the LSE on September 6.
Four years after Softbank’s acquisition of Arm, the former decided on a deal with chipmaker giant Nvidia to sell Arm in a deal worth $40 billion. At the time, Nvidia had also announced that Arm will operate its open-licensing model. Additionally, Nvidia was to build on to Arm’s presence in the UK and establish a new global centre of excellence in AI research at the latter’s Cambridge campus. Nvidia had also decided to invest in a state-of-art Arm-powered AI supercomputer and a startup incubator.
Deal falls through
Since the deal was announced it faced numerous challenges on the antitrust and regulatory side of things. Many in the industry feared that Nvidia’s takeover would bring Arm’s licensing model to an end and offer Nvidia a considerable advantage.
Both the European Union Commission and the US FTC intervened in an attempt to block the takeover. “Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, with distortive effects in many markets where semiconductors are used,” European Commissioner Margrethe Vestager said in 2021. Even as the uncertainty around the deal continued, Nvidia launched its promised Cambridge 1 Supercomputer.
In September 2021, the two parties finally terminated the deal owing to regulatory challenges. In a blog, Nvidia said, “The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties. Arm will now start preparations for a public offering.”
Interestingly, in an earlier blog in July 2021, Arm CEO Simon Segars had ruled out an IPO, saying, “The combination of Arm and Nvidia is a better outcome than an IPO.” He added that IPO would yield pressure to deliver short-term revenue growth and suffocate profitability.
Arm goes public for the second time
Last week, the chip designer made its public offering last week making it the largest US-based IPO in 2023. Arm began trading on Nasdaq under the symbol ARM and the IPO closed on September 18.