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Arm swans off to Nasdaq despite UK gov pleas to IPO in London

Foreign-owned chip business gets even less British, no dual listing for now

Arm has confirmed its shares will be listed only in New York following its initial public offering (IPO), dashing hopes of the UK government and others - for now at least - of a dual list on the London Stock Exchange.

In a statement, the Brit chip design company said it intends to keep its headquarters in Cambridge, UK, as well as Arm's "material IP," and that it has plans to open a new site in Bristol.

Arm chief executive Rene Haas said in a statement: "After engagement with the British government and the Financial Conduct Authority over several months, SoftBank and Arm have determined that pursuing a US-only listing of Arm in 2023 is the best path forward for the company and its stakeholders."

He added that Arm would "consider a subsequent listing in due course".

The development, however, is seen as another blow for the FTSE 100 shares index, as London has already lost its crown as the top European trading center after the UK left the EU.

The move follows months of speculation about whether Arm, which is owned by Japanese investment outfit SoftBank, would list on both New York's Nasdaq and the London Stock Exchange, although there was never any doubt that if it came down to a choice between the two it would be New York; SoftBank stated in June last year that it intended to list Arm on the Nasdaq.

It was reported in January that Prime Minister Rishi Sunak had hosted Haas at Downing Street in a bid to have Arm listed in London. The meeting was also joined remotely by Masayoshi Son, founder and CEO of SoftBank.

It was even rumored at one point that the UK government was considering invoking the National Security and Investment Act (NSIA), which gives ministers the power to intervene in mergers and acquisitions on the grounds of national interest, although there is no evidence this was given serious consideration and Arm is already owned by a foreign organization.

Russ Shaw, founder of Tech London Advocates, said the decision is a significant blow to the UK tech sector, as well as disappointing news for the London Stock Exchange.

"Arm has been an important global leader in the semiconductor space and an exemplar British technology and chip design company," he stated.

Shaw said this was a direct consequence of the UK government's shortsighted decision to allow Arm to be sold to a foreign buyer in the first place, which he reckoned would not have happened elsewhere.

"Arm's journey to the Nasdaq was somewhat sealed when it was allowed to be sold to an overseas acquirer back in 2016. Nations like the US and China that recognise the strategic value of chip companies would not have allowed such a decision to be made, and the UK must now endeavour to proactively protect its semiconductor industry."

Although Arm is keeping its headquarters in the UK – for now, at least – the decision not to list in London "demonstrates a lack of faith in the UK," Shaw said, and "adds urgency to the need for the UK government to publish its long-awaited semiconductor strategy."

However, Gartner vice president for semiconductors and electronics Richard Gordon disagreed that Arm's move was all about the lack of a government strategy.

"I don't think this has much to do with the UK's lack of a 'coherent technology strategy,' which is a given," he told us. "More likely it's to do with financial market considerations."

It has previously been stated that Arm will have better access to finance in the US stock markets, and Gordon pointed out that most of Arm’s major licensees are also based on the US.

The decision to float Arm on the stock exchange as a publicly listed company comes after an earlier attempt by SoftBank to sell the chip designer to Nvidia fell through at the start of 2022.

The repercussions from that failure were that Arm decided it needed to embark on a round of cost cutting ahead of the IPO, and this saw it lay off 20 percent of the UK workforce last year, which should be considered when Haas points to the company's "continued headcount growth" in his statement.

SoftBank was said to be seeking an estimated $66 billion from the sale of Arm to Nvidia, and current valuations for the IPO are varying between $30 billion and $70 billion, according to Bloomberg. The wide range reflects the challenges of valuing the company against the current volatile state of the semiconductor industry, it said. ®

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