SoftBank is reportedly considering a full or partial sale of Arm to bolster the company’s cash reserves as part of a $ 41 billion debt reduction program. The Wall Street Journal reported earlier this week that a sale, or potentially an initial public offering, could be options that will change the future of the British chip designer.
The Goldman Sachs group is reportedly acting as an advisor for a potential sale, which is still in its early stages. If there isn’t enough interest or tempting offers on the table, SoftBank might not move forward with a sell or an IPO.
Along with Qualcomm and Intel, Arm is a major player in the processor space as a developer of chips for smartphones, Internet of Things (IoT) applications, and 5G networks.
Apple switches to Arm
Apple announced in June that the next generation of Macs will switch from Intel’s x86 chips to Apple’s silicon based on the Arm architecture.
SoftBank acquired the Cambridge-based company in 2016 for $ 32 billion. Four years ago, SoftBank CEO Masayoshi Son called the purchase “an excellent strategic fit within the SoftBank group as we invest to seize the very significant opportunities offered by the Internet of Things.” However, SoftBank’s financial situation has since changed dramatically. The Japanese conglomerate’s Vision Fund – in part due to the catastrophic investment in WeWork – was responsible for operating losses amounting to billions of yen.
Under pressure from the Elliott Management Corp of Paul Singer, a major SoftBank investor with an estimated $ 3 billion stake, the company announced in March a plan to repurchase $ 41 billion and debt reduction. This could include the sale of assets like Arm, as well as the repurchase of common stock to the tune of $ 18 billion. SoftBank’s program will run over the next four financial quarters in tandem with a separate $ 4.8 billion buyback program.
SoftBank exits T-Mobile
In June, SoftBank announced plans to sell about 198 million shares of T-Mobile US for about $ 21 billion.
WeWork executive chairman Marcelo Claure, backed by SoftBank, also recently said the start-up is on track to turn a profit by the end of 2021. Following a restructuring effort ruthless and selling off non-mission critical assets, and in part due to an increase in customer demand for flexible office space due to disruption caused by Covid-19, Marcelo Claure said WeWork is now one year ahead of meeting financial goals.