by Echo Wang
NEW YORK (Reuters) – Arm Holdings Ltd clients Apple Inc, Nvidia Corp, Alphabet Inc and Advanced Micro Devices have agreed to invest in the chip designer’s initial public offering, people familiar with the matter said.
Intel Corp, Samsung Electronics Co Ltd, Cadence Design Systems Inc and Synopsys Inc have agreed to participate as investors in the offering, the sources added. The talks are ongoing and other investors are also in talks to invest in the IPO, the sources added.
Softbank Group Corp., which owns Britain-based Arm, is targeting a valuation of $50 billion to $55 billion, Reuters reported earlier on Friday. Arm clients have agreed to invest in that valuation range, the sources said.
Although demand for ARM shares could drive valuations higher at the time of the IPO, the move represents a decline from the $64 billion valuation that SoftBank acquired for a 25% stake in the company that was already out of existence. From the 100 billion dollar vision fund last month.
Apple, Nvidia and other strategic investors have agreed to invest between $25 million and $100 million each in Blockbuster’s IPO, the sources said. Arm and Softbank have allocated 10% of the shares sold in the IPO to their clients, Reuters previously reported.
Amazon.com Inc, which has previously negotiated to invest in the IPO, has decided not to participate, said one of the sources, who asked not to be identified because the discussions are confidential.
A scramble among Arm’s clients, which include some of the world’s biggest technology companies, to acquire shares in an IPO is testing the semiconductor designer’s tenacity to not sidestep the chip industry.
The demand is fueled by companies’ desire to expand their business relationships with ARM and keep rivals from getting an edge, Reuters previously reported.
While an investment in an IPO doesn’t come with a seat on Arm’s board or the ability to decide strategy, it strengthens the relationship with each participating company and makes it harder for a competitor to acquire Arm later.
Arm and SoftBank did not immediately respond to requests for comment.
AMD, Intel, Synopsys and Nvidia declined to comment. Alphabet, Amazon, Apple, Samsung and Cadence did not immediately respond to requests for comment. The Wall Street Journal reported on Arm’s review target earlier Friday.
(Reporting by Echo Wang in New York; Editing by Anirban Sen and Rosalba O’Brien)