Will Samsung join Arm's US listing process?

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www.koreatimes.co.kr, Sept. 27, 2022 – 

SoftBank founder Masayoshi Son's plan to meet Samsung Electronics Vice Chairman Lee Jae-yong in Seoul comes just months after the global tech investor dropped plans for the London listing of British chip designer Arm due to the departures of investment minister Gerry Grimstone and digital minister Chris Philp following the resignation of of U.K. Prime Minister Boris Johnson. Grimstone and Philp played leading roles in talks with SoftBank over the U.K. listing.

Son is set to ask the Samsung chief to forge a strategic alliance with Arm, while the Korean chipmaker appears to be somewhat stumped, saying that it has no idea what Son's business proposal could be. Samsung didn't elaborate further.

After President Yoon Suk-yeol granted a pardon for the Samsung leader, the company's top executives are increasingly being asked to implement very detailed and applicable business plans to boost shareholder returns amid a slowdown in demand for memory chips. Samsung's share price fell some 30 percent from January to Sept. 23, while South Korea's benchmark KOSPI index was down 23 percent during the same period, according to data provided by the Korea Exchange (KRX).

Samsung Electronics had some 6 million minority shareholders as of today following its 50-to-1 stock split in 2018. Senior company executives said that Samsung, which is a leader in the global memory chip industry, is on track to explore acquisition opportunities in order to secure future growth engines.

However, despite repeated positive comments by Samsung executives over the progress of its corporate acquisition efforts, several sources familiar with the issues said chances are low that Samsung will pursue a sizable stake in the British chip designer.

"First, the departures of the two British ministers mean a lot because they were strong supporters in backing Son's idea for Arm's London initial public offering (IPO). SoftBank will pursue a direct U.S. listing of Arm. Its founder Son needs Samsung's support for Arm's successful U.S. listing process," a senior industry executive said via telephone, asking not to be named.

In June this year, Son told investors and shareholders that he was in favor of a U.S. listing because most of Arm's clients are based there. Plus, its CEO Rene Haas recently told the Financial Times that Arm wants to use the capital raised from its upcoming IPO to look at pursuing deals. "Arm executives are pretty confident the company can stand on its own two feet. The timing is good for us," Hass was quoted as saying.

The U.S. market is much better than London in terms of liquidity and the number of prospective larger investors. Meanwhile, Arm's battle over control of its China unit, earlier considered the biggest hurdle to pursuing an IPO, has been resolved.

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