SoftBank to buy Britain's ARM for US$32 billion in record deal

SoftBank Group agreed to buy ARM Holdings for £24.3 billion, securing a slice of virtually every mobile computing gadget on the planet and future connected devices in the home.

The Japanese company is offering 1,700 pence in cash per share or a 43 per cent premium to Friday’s close, according to a statement Monday. The deal would be the biggest-ever for SoftBank, which under chairman Masayoshi Son became one of Japan’s most acquisitive companies with stakes in wireless carrier Sprint and Alibaba Group.

“This all happened very, very quickly,” ARM chief executive Simon Segars said in a telephone interview. “They made an offer than was very, very compelling for our shareholders and a proposal for how to invest in the company for the future.”

SoftBank will gain control of a cash-generating mobile industry leader who gets royalties every time clients such as Apple, Samsung or Qualcomm adopt its designs, which are considered power-saving and efficient. The deal is the biggest takeover of a British company since the country last month decided to leave the European Union and comes after the pound plummeted against the Japanese yen.

“Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors,” UK chancellor of the exchequer Philip Hammond said in a statement.

ARM’s headquarters will remain in Cambridge as well as its senior management team, and SoftBank pledged to at least double employee headcount in the UK over the next five years. ARM currently employs about 4,000 people. It will fund the acquisition partly through cash and loans, according to the statement. ARM’s shareholders will get a dividend of 3.78 pence per share.

“ARM has what we view as an unassailable library of IP processor designs based on chip performance, size and power performance,” Neil Campling, an analyst with Northern Trust Securities, wrote in an email. “ARM is growing at 10x the rate of the semiconductor industry it serves and is increasingly the glue that binds the disruptive forces of the entire digital world, not just US$700 smartphones.”

SoftBank approached ARM, which didn’t run an auction process, two people familiar with the matter said before the announcement. 

SoftBank had been considering a purchase of ARM before the UK’s decision to leave the European Union, but Mr Segars did not think Brexit and the pound’s subsequent fall in value against other currencies, such as the yen, was a driving motivator for Softbank. “This was not driven by Brexit at all,” Mr Segars said. “This is about driving the future.”

He said there will be no changes in the way ARM operates, and Softbank will allow the company to continue to exist as a standalone unit. “We’ve been completely independent since our IPO and that is something that our partners value,” Mr Segars said, referring to ARM’s semiconductor manufacturing customers. He added that Softbank “will keep investing in our roadmap of existing technologies” and that “we are not getting acquired by someone who wants to strip costs out of the business.

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