SoftBank to buy leading chip designer ARM for $32B
LONDON, United Kingdom – Japanese mobile giant SoftBank has agreed a cash takeover of iPhone chip designer ARM Holdings for around £24.3 billion ($31.8 billion), the pair said Monday, July 18, in a major investment boost for post-Brexit Britain.
"We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market-leader in its field," SoftBank chairman and chief executive Masayoshi Son said of the deal valuing the British group at about $32 billion or 29 billion euros.
Son added that the deal marked SoftBank's "strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent" in the university city of Cambridge where ARM is headquartered.
Britain's new finance minister Philip Hammond praised the mega deal that comes amid warnings about a slowdown to growth in the country after its vote last month to exit the European Union.
"This £24 billion investment would be the largest ever from Asia into the UK," Hammond said in a separate statement.
"It would guarantee to double the number of jobs in ARM in the UK over the next five years and turn this great British company into a global phenomenon.
"Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business -- and open to foreign investment," said Chancellor of the Exchequer Hammond.
Analysts said the vast weakening of the pound, in particular against the dollar, since the referendum result is making British companies attractive for foreign groups.
"We can see in this deal the effect of Brexit and the collapse in the pound as British companies become ripe takeover targets," said Neil Wilson, analyst at ETX Capital trading group.
"A lot more British firms could become foreign-owned quite soon," he added – also after South African general retail group Steinhoff International last week agreed a takeover of British discounter Poundland for around £597 million.
SoftBank meanwhile said it would offer £17 for each ARM share, a premium of around 43% compared with Friday's closing price of £11.89. That resulted in ARM's share price rocketing 45% in early trade on Monday.
"The consideration values the entire existing issued and to be issued share capital of ARM at approximately £24.3 billion," said the company statement.
ARM chairman Stuart Chambers said the "compelling" offer for the company's shareholders "secures the delivery of future value today and in cash".
He added: "The Board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens."
ARM develops and licenses technology central to digital electronic devices, including those made for Apple's fierce rival Samsung.
The British company's customers shipped "about 15 billion ARM-based chips" in 2015, up almost a quarter year-on-year, according to the group's website. Almost half of the chips were used for mobile phones and tablets, it added.
ARM's revenues meanwhile jumped 15% to almost $1.5 billion last year on the design of chips used also in computer servers. – Rappler.com