Softbank is said to have been weighing the possibility of holding an initial public offering (IPO) for Arm Holdings, but now there’s said to be at least one company out there that wants to straight-up buy Arm from Softbank.
Balancing a possible IPO against a possible sale is complicated, so Softbank has engaged the services of Goldman Sachs to help it sort out what to do with the designer of microprocessor cores that it bought in 2016 for $32 billion. Softbank hiring Goldman Sachs was first reported by The Wall Street Journal. The WSJ’s source said Softbank called Goldman after receiving “inbound interest” from another company about buying Arm.
None of the three companies had commented publicly as this article was written. (Four – if you count the unidentified suitor.)
In 2016, when Softbank bought Arm, part of the attraction for Softbank was that Arm was branching out to target the Internet of things market. In 2018, Arm bought Treasure Data, and at about the same time announced its Pelion IoT platform. At the time, Arm cautioned that the pursuit might suppress profits in the short term.
Just last week, however, Arm said it would transfer its IoT operations to Softbank to focus on microprocessor IP – and on profitability.
In retrospect, if Arm is heading for either an IPO or being acquired, transferring an operation that is a drag on profitability is a sensible preparatory step.