The deal is the largest investment ever from Asia into the United Kingdom, but skeptical investors sent shares down almost 11% in Tokyo trading.
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ARM technology is used in 95 percent of smartphones and 80 percent of digital cameras, according to the company. But the Cambridge-headquartered firm also wants to put them in cars and other household appliances so that everything can talk to everything else via the internet.
SoftBank founder Masayoshi Son has taken a more active role at money-losing Sprint, which has some $33 billion in debt.
SoftBank meanwhile said it would offer £17 for each ARM share, a premium of around 43 percent compared with Friday’s closing price of £11.89. A record 14.8 billion chips powered by ARM technology were shipped in 2015, accounting for 32 percent of the global market. However, there is a psychological limit on how far the multiple can expand on the public markets.
“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”, said SoftBank chairman and chief executive Masayoshi Son.
And while the British government could protest the capture of its biggest tech asset over the pound’s post-Brexit weakness, it is unlikely to stop it. Softbank is promising to increase United Kingdom employment after the deal is done.
The combined group hopes the acquisition will allow it to seize opportunities in the “internet of things” – giving everyday objects a connection to the internet.
Now what: Softbank also stated it not only intends to preserve ARM’s existing organization – including its senior management team, Cambridge headquarters, brand, partnership-based business model, and culture – but also plans over the next five years to “at least double” its employee headcount in the United Kingdom, and increase its headcount by an undisclosed number outside the United Kingdom.
With Apple’s backing, ARM was spun out of Acorn in 1990.
Softbank intends to preserve the United Kingdom tech firm’s organisation, including its existing senior management structure and partnership-based business model, ARM said.
ARM is a really important company for the technology sector in UK.
What it does: Mobile communications businesses including SoftBank Mobile, broadband services, telephone and data services, internet advertising and e-commerce services.
Dan Ridsdale, analyst at Edison Investment Research, said “An increase in inbound merger and acquisition activity was one of the obvious consequences of Brexit and weakened sterling, but few expected it to manifest itself so quickly or at so large a scale”.
Speaking in the Commons for the first time since becoming PM, Mrs May said: “I have spoken to SoftBank directly”.
Philip Hammond, Britain’s new Treasury chief, said the deal shows that Britain has “lost none of its allure to worldwide investors” after the June 23 vote to leave the EU.
A spokeswoman for the prime minister said Mrs May believed the deal was in the country’s national interest – a gauge that she will use to assess any future foreign takeovers.
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Son added on Monday that the deal marked SoftBank’s “strong commitment to the United Kingdom and the competitive advantage provided by the deep pool of science and technology talent” in Cambridge.
