Arm will seek to ditch shares in the rebellious Chinese
Hardware

Arm will seek to ditch shares in the rebellious Chinese entity in order to go public in the US

Arm China’s recent history is full of contradictions with its British parent company Arm. Efforts have been made since June 2020 to remove local division CEO Allen Wu, but he now controls almost 17% of Arm China’s shares and therefore will not leave the post. In preparation for the IPO, the UK arm may transfer its stake in the Chinese joint venture to the remaining SoftBank structure.

    Image source: Arm

Image source: Arm

This publication reports The Financial Times, who explains that if the transaction is successful, Arm will only be bound by obligations under a license agreement with the Chinese division, and 47.3% of the shares will be transferred to the Japanese company SoftBank, which now owns all the assets of the British developer of processor architectures. It is known that the Japanese owners intend to list Arm on the US Stock Exchange in New York in order to raise at least $60 billion. The Chinese joint venture Arm China is standing in the way of placing shares of the parent company in the US in this situation .

    Image source: FT

Image source: FT

Under such a deal, Arm will continue to receive royalties from the Chinese division, which accounted for up to a fifth of the UK company’s total sales last year, but will not have to audit Arm China’s financial statements. Now there are problems with that, they just prevent us from going to an IPO. The scheme of the deal is also not entirely clear, since 36% of Arm China’s shares are owned by Hong Kong investment company Hopu, and the sale of British Arm’s stake in the capital of the joint venture SoftBank structures will need the approval of Allen Wu himself, who is very aggressive towards the British owners and keeps the company seal. Shenzhen authorities also need to approve this deal, and SoftBank and Arm have been negotiating with them for several months.

The Chinese authorities are interested in ensuring that local developers of mobile processors retain access to ARM architectures, as the joint venture was originally set up to guarantee such access. Options including a change in the composition of Arm China’s board of directors and the introduction of new shareholders were also discussed during the negotiations. Parent Arm expects to go public within the next 12 months. Arm China’s head has previously expressed his willingness to lead the division to an independent IPO in one of its Chinese sites.

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Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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