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SoftBank's Sale of Arm to Nvidia Collapses, Arm to IPO
- jiveturkey 5y ago> before March 2023. Why does it take so long? I would be pretty surprised if they aren't already operating with audited GAAP financials, etc etc. Or is the extended date a hedge against market conditions, to avoid having to announce a delay.
- hikingsimulator 5y agoAn IPO takes a really long time to initiate, draft, and conclude -- from legal due diligences, to investment banking drafts or market scouting, and securing early buyers. Investment banks kind of bid on the right to do the IPO for instance, each offering their own kind of package for ARM to go with. M&A departments in New York or London must have been (or still be) pulling all-nighters.
- flerchin 5y agoIt's not clear to me, and I'm sure folks here would know. It seems possible that the ARM IPO could end up raising quite a bit less than the Nvidia deal. Couldn't Nvidia buy a majority of ARM shares on the open market, at a discount, with no regulatory oversight?
- klelatti 5y agoNo. At a certain level of ownership (less than 50%) they would be forced to make a full bid and the regulators would step in again and block.
- mrtweetyhack 5y ago
- judge2020 5y ago
- sekh60 5y agoGood, we need more players, not less.
- lunfard000 5y agoI didn't like much this but having ARM in the hands of financial institution which doesn't have any motivation to invest in the technology doesn't seem any better (and probably doesnt understand/doesnt care about it). In the other hand, Nvidia have a good track record creating good products.
- deleted 5y ago[deleted]
- p1necone 5y agoNVidia has a track record of creating good products, but all proprietary and with closed source firmware/drivers. And lots of arbitrarily software locking features to extract more money from different market segments.
- zinekeller 5y ago> And lots of arbitrarily software locking features to extract more money from different market segments. This is the cultural difference between ARM and Nvidia. ARM does care enough about their IP that you'll need to pay them for ARM's effort to develop their IP, but beyond that they will not restrict you unless it'll put ARM into legal trouble (basically export restrictions). Hey, you could get everything now with a one-time license payment if you are willing to do that. It's not FSF open, but it's certainly better than a lot of hardware companies. Nvidia is trying to extract everything into each pipeline. You want to use their hardware? You have to agree to only use this to precise conditions that is purely for market segmentation, which conflicts with ARM's culture. Compounding this with the fact that almost all acquisitions done by Nvidia that was more open was closed down (try talking to Nvidia about Mellanox), if the ARM acquisition proceeded, it'll be a bad day for everyone else.
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- na85 5y ago>ARM to IPO I'll be looking to pick up some shares as a long-term investment. I think ARM is one of the best things to happen to computing, and anything that threatens the x86 monoculture/hegemony is a good thing in my view.
- HHC-Hunter 5y agoHonestly at this point, any big tech IPO is just a license to print money.
- nly 5y agoMight not be that way when they go public a year from now
- PedroBatista 5y agoThe printer will start to run out of paper in a few months. The companies that have their own invoice printer will “win”, the others will suffer.
- thrwyoilarticle 5y agoIt's been months for years
- PedroBatista 5y agoThis time is based on inflation and the Fed increasing borrowing rates. Money managers already started to move their positions to stocks that fare well when things cool off.
- baq 5y agopay attention. it's already started.
- thrwyoilarticle 5y ago...as it did in Winter 2018 and Spring 2020!
- NortySpock 5y agoWhy will ARM succeed where MIPS faded into obscurity? (Well, relative obscurity. I see they are still used in media devices and cheap routers.) https://en.m.wikipedia.org/wiki/MIPS_Technologies https://en.m.wikipedia.org/wiki/MIPS_Technologies
- daemonhunter 5y agoARM has been here before. I owned stock in Arm, before it sold.
- arcticbull 5y agowell, it's by far the most common CPU architecture in the world.
- a-dub 5y agomy thoughts exactly.
- zinekeller 5y agoWhile it's indeed good to have a healthy skepticism towards these things, there's a major difference between the two: a) MIPS has been acquired too many times by a company that can lock others out (SGI is definitely the Nvidia of today outside of consumer stuff), and b) MIPS, while have been present in game consoles and workstations, didn't really have the visibility ARM has today. They didn't have any consumer devices labelled with "MIPS chipset inside!", even though it was present in game consoles.
- snvzz 5y ago>(Well, relative obscurity. I see they are still used in media devices and cheap routers.) It's actually gone; MIPS owners have abandoned MIPS to focus on RISC-V.
- HideousKojima 5y agoKind of a shame because MIPS is one of the more approachable ISAs if you want to learn assembly
- inerte 5y agoI think it's interesting how selling Arm to Nvidia or going IPO are _wildly_ different and I think SoftBank doesn't mind what happens to the company as long as they get their return. I mean, at the end of the day financiers will finance but if you're Arm employee this must be a pretty wild ride.
- BluSyn 5y agoSoftBank is desperate for capital due to recent bad bets. ARM is one of the most valuable assets they have. As for ARM itself, this probably isn't the best path forward, and neither option would even be considered if it weren't for SoftBank's current predicament.
- rubatuga 5y agoPeople thought blocking this acquisition will result in more competition overall. Unfortunately, letting the stock market control ARMs actions will still lead to anti-competitive actions harming you as a customer. Not sure if blocking the merger will be overall better.
- jakey_bakey 5y agoIt's weird, according to the FT they only want the capital to finance share buybacks. So, basically, they want to prop up their share price.
- HWR_14 5y agoI didn't see that article, but that seems to be a two-step process for SoftBank to sell their shares on the open market without spoiling the market by public ally divesting themselves of shares. They sell new shares, then use the money that generates to buy a percentage of SoftBanks shares.
- avidphantasm 5y agoThis is why financial engineering and ultimately all Money-Money transactions are ultimately nihilistic and boring. Who cares how much money you have if you aren’t doing new/innovative/interesting things?
- coob 5y agoIs it an IPO if they’ve already previously been public?
- mise_en_place 5y agoYes, that doesn't change anything. Many companies have been taken private that were public, and then went public again. Your choice for going public is either an SPAC or an IPO/DPO.
- Slartie 5y agoMaybe we should call it a Secondary Public Offering then.
- kitd 5y agoYAPO? "Yet another public offering"
- qeternity 5y agoHWGA - here we go again
- iam-TJ 5y agoI was just writing something similar after some research when I found this existing thread. Maybe we should refer to these public-private-public carousels as PEPOs (Private Equity Public Offering) ? :P Pedantic nit: not quite an IPO (Initial Public Offering) in its true sense since the original ARM Holdings was already a public limited company (PLC) before Softbank bought it from its shareholders in 2016. The trading entity and group parent is Arm Ltd, a private limited company formed in 1990 [0]. There is however a currently dormant Arm Holdings Ltd [1] incorporated in 2018 which may be converted to a public company so it would be the first time this legal entity has been publicly listed. [0] https://find-and-update.company-information.service.gov.uk/company/02557590 https://find-and-update.company-information.service.gov.uk/c... [1] https://find-and-update.company-information.service.gov.uk/company/11299879 https://find-and-update.company-information.service.gov.uk/c...
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- olliej 5y agoThis sounds super dumb - but given their acquisition was blocked, would Nvidia be stopped from simply buying the majority of shares at IPO? To be clear I'm not suggesting this will happen or not, I'm just curious if it would be allowed?
- isatty 5y agoIt will be regulated.
- hollerith 5y agoMost very big mergers consist of one company buying all the shares of a publically-traded company, so it is likely that the regulators have the power to stop those kinds of mergers though I cannot think of an example.
- PedroBatista 5y agoThat would be considered a “cute move” and something like that would put Nvidia and some investment bankers in hot water. Even if they bought a controlling amount of shares in public markets that would be subject to regulation.
- reilly3000 5y agoSoooo back on the LSE or? It was such a hot stock in 2014-15. Softbank kinda bought it at the peak. Still, Apple has proven ARM on the desktop is phenomenal, and Ampere has done the same in the datacenter. Both have swiftly made compiler support accelerate dramatically. I would love for my next desktop to be arm-based, and it would be great if it didn’t NEED to be a mac. Broad adoption of ARM would be a huge win for sustainability. I’m bullish on their business, even if their business model isn’t vertically scalable. I think that RISC V also has a bright future, but its still a bit far out before its a viable competitor. Still there have been some things that look really promising such as what is coming out of SiFive: https://www.sifive.com/press/sifive-raises-risc-v-performance-bar-with-new-best-in-class https://www.sifive.com/press/sifive-raises-risc-v-performanc... And Intel just announced a $1B fund for companies building on their Open Foundry RISC-V alliance. https://www.tomshardware.com/news/intel-1b-fund-risc-v https://www.tomshardware.com/news/intel-1b-fund-risc-v Big things are happening for small instruction sets… watch this space.
- tjoff 5y agoThe thing that stands out about ARM is that the user has less control of the hardware. The manufacturers try and succeed in keeping an extremely closed ecosystem. Why would you want that? The Intel+AMD duopoly seems like nirvana compared to the Ampere and M1. In fact, Ampere and M1 are a hint of the most dystopian future of computing I can imagine.
- klelatti 5y agoAny architecture that forces something like the Intel Management Engine on users is closer to dystopia than nirvana.
- als0 5y agoAbsolutely. Whether it's ARM-based or RISC-V, nothing will stop high-end SoC vendors from developing closed hardware blocks or firmware, especially if they have customers from the DRM space (CA vendors).
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- snissn 5y agoi only read stories of softbank failures.. are they ok?
- JoachimS 5y agoFrom a pure business perspective, their record looks bad, and may be hard to understand. This article about Softbank may be worth reading. https://www.bloomberg.com/news/articles/2018-10-21/explaining-softbank-s-close-ties-with-saudi-arabia-quicktake https://www.bloomberg.com/news/articles/2018-10-21/explainin...
- samwillis 5y agoHopefully it will end back on the LSE, there was much lamenting here in the UK when SoftBank acquired them. They are one of the UKs biggest tech success, one of our few “unicorns”. For them to be be back on the LSE it would be a good signal of strength in UK tech. I wouldn’t be surprised if there is some lobbying going on behind the scenes from the UK government to try and ensure it happens. Some strategic tax brakes or regional investment. With the governments (somewhat controversial) investment in OneWeb last year they have shown they have a uk tech strategy. Although I think that was Dominic Cummings doing and he’s well out of the picture.
- nly 5y agoThe UK gov is keen for Revolut (another SoftBank investment) to IPO in London as well, but it looks like they're trying to court Americans so they can make a bigger splash there.
- jakey_bakey 5y agoAbsolutely no chance Revolut lists in London. They're super globally-focused and the founder wouldn't take the loss. Starling bank on the other hand, is a great prospect. It's still founder-controlled, UK-focused, and would be able to join the FTSE 250/100 quite easily where the S&P is beyond its reach.
- actuator 5y agoWhy would LSE listing be a loss? Would capital that moves in the US markets have any problem coming to the UK one if they see a good prospect?
- robbiep 5y agoThis is a bit of a take on the current dynamics - https://www.economist.com/britain/2022/01/29/britains-newly-listed-tech-firms-are-taking-a-beating https://www.economist.com/britain/2022/01/29/britains-newly-...
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- JoachimS 5y ago1.25 BUSD to keep their ARM license. Pretty sweet deal there Nvidia...
- herunan 5y agoHopefully listing in the LSE. It sorely needs hardware stocks.
- peanuty1 5y agoSoftbank would be stupid to do that though.
- drumhead 5y agoIf SoftBank want to maximize their return then they'd probably do best to list ARM in the US. There's no way they'd get the crazy valuations you seen on NASDAQ on the LSE. It's why so many UK tech companies IPO in New York. They don't seem to get particularly excited about tech in London.
- ccity88 5y agoThat's because a lot of these ""tech"" companies are just other business models in disguise. My especially favourite are the unsustainable business model food delivery apps like Deliveroo and JustEat, or the retail apps that are classed as tech for some reason like online consumer brands such as Victorian Plumbing and whisky seller Artisanal Spirits. It's clear to me that IPO's are no longer about long term equity, and more about short term gambling. This is especially true when you have both US and UK markets actively trying to attract more retail investment, just to swindle the public out of more money. Until we see a radical shift in the way we think about and measure the performance of companies, IPO's and equity markets will continue to be a wild ride.
- martinald 5y agoJustEat isn't unsustainable. They are profitable (pretty wildly so until they started offering their own delivery riders to grow to outlets which don't have drivers -- which has started hitting margins). Deliveroo much less sustainable.
- ksec 5y agoIt sort of make sense for Nvidia's shareholders. The initial offering for ARM was only worth $38.5bn, which was already expensive due to SoftBank initial purchase price and not wanting for a loss. But at Nvidia's peak this deal was worth "$87bn". For a company that makes less than $2B in revenue and at best ~$300M in Operating Income. Remember this isn't something you can buy and milk the crap out of other market players. "Not a very British way of doing business" is A Direct Quote from ARM. ( Edit: Because of perceptual licensing agreement, for those unaware of how ARM business model works ) It didn't make sense how ARM was worth $22bn in 2016 on LSE, that has a PE100+ when I cant see how it could double its Net profit in the next 10 years, with a saner valuation of P/E 50. It make even less sense to me when Softbank bought it for $32bn. Didn't make any sense when Nvidia want it for $38.5bn, and later at $50bn+. Now we are back to square one, how many investors, in the open market are willing to buy ARM's stock at a valuation of, let say the same $32bn as Softbank initially paid? Roughly P/E 100, assuming they managed to grow ARM business from 2018 at ~$220M operating income to $300M in 2021. I much rather bet on Intel if I had the money. And of course many on HN will think ARM is worthless because the future is going to be the Riscy Silver Bullet. Disclosures: I do not currently hold any stocks or Mutual Funds, Indexes and other financial instrument.
- ant6n 5y agoBut Intel has a P/E of 9.91, they must be teetering on the brink of bankruptcy!
- Wronnay 5y agoIt's really funny how the market thinks that Intel isn't in the game anymore. They may not be as energy efficient as M1 or ARM chips but they certainly show that they are still a competition and invest a lot of money to improve their performance.
- unfocussed_mike 5y agoThe thing is, the market can be right without knowing why it is right. The market thinks that in some fixed, relatively near point in the future we will look back at now and say "Intel was already hosed, it just didn't know it". It may be that the market is currently only expressing interest in the hopes of others that this particular future will come to pass, but that is the only way it will.
- benreesman 5y agoMy memory might fail me, but I think the compiler wizards were building all the core FB stuff on aarch64 back in like 2014-2015 or something. Someone saw further down the road than I did.
- taffronaut 5y agoYour memory is good. The bug to port FB's HipHopVM to aarch64 was raised in 2013[1] [1] https://bugs.launchpad.net/linaro-aarch64/+bug/1099824 https://bugs.launchpad.net/linaro-aarch64/+bug/1099824
- ekianjo 5y agoSo now after the IPO, Nvidia can buy a controlling part in ARM or do a hostile takeover.
- chriszioutas 5y agoif they IPO can Nvidia buy a ton of shares and indirectly buy Arm?
- rwmj 5y agoNot easily. Trying to gain a controlling stake in a public company triggers regulatory involvement. I'm still unclear why Nvidia would want to control Arm. If they wanted an architecture they could extend as they wished, they can use RISC-V (which they are already doing in a small way).
- ridgered4 5y agoA lot of people are of the opinion they wanted to put the squeeze to everyone using ARM, but based on reading that doesn't really seem super feasible to me. I think nvidia is worried about being shut out of the x86 space so there's nowhere to sell their products. So they had a long term play to guide ARM development as an alternative platform. I could see that platform being useful as a hedge, but also giving nvidia a better way of competing in consoles and if they were really successful maybe eventually turning Intel/AMDs x86 advantage into a weakness. Back when Intel killed off all third party motherboard chipsets nvidia won a lawsuit against Intel where they forced Intel to ensure a pcie bus for GPUs on all their platforms. That provision expired a few years ago. If nvidia is smart (and I believe they are) they've never let go of that worry that APUs might shove them out of the market. Their best bet is to remain so much better than the competition they cannot be ignored, but it would be wise to have a backup plan.
- justin66 5y ago> I'm still unclear why Nvidia would want to control Arm. Nvidia have some really good high performance Arm cores that they've developed and sold (Denver, Carmel). Continuing to invest in that area makes some sense for Nvidia today, but it would make a lot of sense if the products they're paying to develop were official Arm products sold through the Arm IP sales channel. In other words, it would increase Nvidia's return on investment on work they're already doing. (on the other hand, the amount they would have ended up paying for Arm might be fully justified by the value of the company but it was really, really high)
- klelatti 5y agoGood. Never a good outcome for the industry for Arm to be owned by Nvidia - and regulators have learned by now that undertakings in these circumstances have little value. Sorry for Simon Segars who must have had a tough job essentially implementing Son's ideas. And those ideas seem to have been pretty poor - Arm China debacle, focus on IoT and selling to Nvidia have all clearly harmed Arm's prospects. It's clear by now that selling CPUs is a mature market but that Arm has room to grow and there is still lots of money to be made in hardware if you innovate - eg in accelerated computing. It's also true both that Arm's model works and that it has more competition than ever from RISC-V. A lot still to play for in my view and I think that the IPO price will reflect that.
- rocketChair 5y agoThank god for that.
- sylware 5y agoThis is weird, when you think that RISC-V is getting more momentum everyday, even with open source CPUs, why 100bn in ARM??
- InTheArena 5y agoDoes anyone believe that this IPO has value, when ARM china has already been stolen and Apple has a perpetual technology license?
- chasil 5y agoIf ARM debuts all future designs under 10nm, then ARM China is out of the game (for now), unless they want to try to backport to 14. Some useful contract language will also forbid access to ARM's customers. ARM processors are also in many, many things besides Apple products.
- blondie9x 5y agoThis is hilarious. It shows why buyouts are so broken and hurt shareholders over time. ARMH was public. It got bought out then tried to get sold out and is now back to where it started at a lower share price and capitalization.
- unfocussed_mike 5y agoGood. Though it is a shame they couldn't have done this before Softbank acquired them.
- Shadonototra 5y agoARM is the best definition of the western's collapse exciting times ahead of us