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SoftBank’s Arm Rebuffs London By Choosing U.S. Listing

The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017.
Reuters

Arm, the chip designer owned by Japan’s SoftBank, said on Friday it would pursue a U.S.-only listing this year, dashing the British government’s hopes that the tech giant would return to the London stock market.

The company did not completely rule out an eventual London listing, saying it intended to consider a subsequent IPO there in due course, without providing further details.

But the decision is a blow to London, where Arm was listed for 18 years until it was bought by SoftBank in 2016 in a $32 billion deal that received the minimum level of scrutiny by the government, leading to criticism that it had allowed Britain’s biggest tech success to be bought by foreign investors.

London worked hard to get the listing, with Prime Minister Rishi Sunak and Arm Chief Executive Rene Haas meeting in Downing Street last month, according to reports. SoftBank’s founder Masayoshi Son was said to have joined by video call.

The loss follows a decision by Dublin-based building materials giant CRH on Thursday to move its primary listing from London to the United States.

The London Stock Exchange said Arm’s decision showed Britain needed to speed up plans for reform.

“The announcement demonstrates the need for the UK to make rapid progress in its regulatory and market reform agenda, including addressing the amount of risk capital available to drive growth,” said Julia Hoggett, chief executive of London Stock Exchange, part of London Stock Exchange Group.

Arm designs the processor technology used in nearly every smartphone, selling intellectual property to companies such as Apple Inc and Qualcomm Inc.

“After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a U.S.-only listing of Arm in 2023 is the best path forward for the company and its stakeholders,” Haas said in a statement.

A British government spokesperson said: “The UK is taking forward ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s leading hub for investment, and the second largest globally.”

Arm, which was founded and is based in Cambridge, east England, with another base in San Jose, California, said it would maintain its headquarters, operations and material IP in Britain.

The company said it would increase its British workforce and would open a new site in Bristol, west England.

Arm has pushed into markets beyond smartphones, such as data center servers, where its low-power designs can cut energy use. Its sales grew 28% in its most recent quarter to $746 million, making it one of the few growth areas for SoftBank.

The Japanese conglomerate decided to list Arm after a deal to sell the chip designer to rival Nvidia, valued at up to $80 billion, collapsed in the face of anti-trust concerns last year.

It immediately identified New York as its preferred destination, where the company will join the likes of Intel, Qualcomm and Nvidia.