Tuesday, 04 August 2020

SoftBank potentially selling Arm – but who’s buying?

by Harry Baldock, Total Telecom
Thursday 16 July 20

The Japanese conglomerate has been aggressively raising funds to reduce its debt and the sale of Arm would put them over the line

It is no secret that SoftBank was hit heavily by the coronavirus pandemic. With a great deal of investment in hotel and travel companies, not to mention the more typical disruption to its other interests, SoftBank found its financial situation slipping, with share prices plunging.   …

It is no secret that SoftBank was hit heavily by the coronavirus pandemic. With a great deal of investment in hotel and travel companies, not to mention the more typical disruption to its other interests, SoftBank found its financial situation slipping, with share prices plunging. 
 
As of March, SoftBank has been pursuing an aggressive disposal programme, with the aim of raising $41 billion to spend on share buybacks and reduction of debt. Between selling part of its stake in the new T-Mobile and its various other businesses, SoftBank is only a few billion away from hitting its target.
 
Now, UK chip company Arm may be going up for grabs, a move which would allow SoftBank to immediately realise its goal, having bought the company for $32 billion back in 2016.
 
With Arm having avoided the initial round of sales, it was reported on Tuesday that SoftBank was considering a “full or partial sale or public offering” of Arm, with rumours circulating that a buyer willing to take the entire business was already expressing interest. 
 
Last week, Arm announced it would spin-off its IoT business to SoftBank, after it failed to deliver the growth expected of it. This leaves Arm to focus on its core semiconductor business – a timely move, given the new prominence sure to be placed on chip availability in wake of the latest US sanctions against Chinese companies in March. 
 
This begs the question of who the potential buyer might be. American companies such as Qualcomm, Intel, and AMD would surely be interested, but whether that interest can translate to a purchase of such enormity remains questionable. Alternatively, the potential buyer could be China-based – while the process would be convoluted, the purchase of Arm would give Huawei a potential light at the end of the tunnel for its semiconductor supply chain woes. And, of course, the buyer may simply be an investment fund of sufficient size, looking to break into the semiconductor industry. 
 
 
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