Arm Flexes Its Pricing Muscle

Bankers working on Arm Holdings’ much-watched initial public offering huddled on Wednesday to spar over how to determine the most important part of the deal: At what price are they going to sell shares when the SoftBank-owned chip designer goes public tomorrow? Like a Vatican smoke signal, push alerts and headlines across the business press blared a price tag late Wednesday afternoon. The company was prepared to price its IPO at $52 a share, for a $55.5 billion valuation!

But, gasp, some of those early headlines were actually off by about $1 billion. When all was said and done, the company ended up pricing the listing $1 a share lower, at $51 apiece. 

A tiny difference in the pricing of an IPO might seem like semantics. But it shows that the math on these kinds of deals is often ripe for debate. In the end, the ultimate decider on valuation—SoftBank’s Masayoshi Son—appeared to take a slightly less crazy route than everyone thought he would. The company is now somewhat more likely to trade well on the public markets, which SoftBank should want since it will still own about 90% of Arm after Thursday.