SoftBank Acquires Vision Fund's Arm Stake for $64 Billion, According to Sources

SoftBank's groundbreaking acquisition of Arm's stake valued at $64B reshapes tech landscape. Details on IPO plans and strategic shifts.

Aug 18, 2023 - 13:51
Aug 18, 2023 - 13:51
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SoftBank Acquires Vision Fund's Arm Stake for $64 Billion, According to Sources
SoftBank Acquires Vision Fund's Arm Stake for $64 Billion

SoftBank Group Corp has finalized the acquisition of the outstanding 25% stake in Arm Ltd. This transformative transaction, estimated at a staggering $64 billion, has been substantiated by individuals well-versed in the matter.

The veil of secrecy surrounding this acquisition is set to be lifted on Monday when Arm discloses its filing for a momentous entry into the stock market. Confidential sources, who are privy to the intricate discussions, have maintained anonymity due to the sensitive nature of the negotiations.

A strategic shift is anticipated in the wake of this acquisition. As preparations for the imminent initial public offering (IPO) gain momentum, SoftBank is projected to pivot its approach. Reports indicate that the conglomerate intends to retain a substantial share of Arm's stocks during the IPO phase, potentially controlling up to a remarkable 90% of the company. This strategic recalibration, in turn, forecasts a departure from initial estimates, suggesting that the capital infusion from the IPO will likely fall below the previously anticipated range of $8 billion to $10 billion.

Underpinning SoftBank's strategic manoeuvre is a series of meticulous negotiations. As the IPO approaches, SoftBank's valuation range for Arm has hovered between $60 billion and $70 billion, as first reported by Reuters. This pivotal event, slated for September, follows SoftBank's prior engagement with Arm. The conglomerate had initially taken Arm private in a transaction valued at $32 billion in 2016, followed by the divestiture of a 25% stake to Vision Fund 1 (VF1) for $8 billion in 2017.

By consummating this acquisition, SoftBank preemptively averts a potential complication following Arm's IPO. Originally, VF1 had strategized to liquidate its stake in Arm gradually post-IPO. Contrarily, SoftBank's expressed commitment entails the retention of a steadfast and long-term strategic investment in the company.

The story first broke in August, when Reuters disclosed SoftBank's intentions to procure the stake from the Vision Fund. Subsequently, The Wall Street Journal unveiled the financial intricacies of the agreement earlier this past Friday.

Concurrently, this landmark deal signifies a triumphant moment for VF1's prominent investors, including Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala. These stakeholders had weathered challenges arising from SoftBank's investments in startups like WeWork Inc and Didi Global, which encountered unforeseen headwinds.

Arm's strategic decision to embark on a public listing dovetails with the nascent revival of the U.S. IPO market. This resurgence comes after a protracted lull lasting approximately eighteen months. In parallel, other corporate entities, such as Instacart and Klaviyo Inc, are poised to make their debuts on the New York public market in September, as per credible sources.

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