The recommended cash deal underlines the desire of SoftBank, which also owns USA telecommunications company Sprint, to expand in the so-called “Internet of Things”, which refers to how a multitude of home devices from smart-thermostats to security cameras and domestic appliances can connect online and work in sync.
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Son added 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 the university city of Cambridge where ARM is headquartered.
The British company’s customers shipped “about 15 billion ARM-based chips” in 2015, up nearly a quarter year-on-year, according to the group’s website.
What it does: ARM is the biggest publicly-traded technology company in Britain. It’s likely that Son sees this as the future, hence the big punt.
In yet another blockbuster deal for the electronics industry, ARM Holdings will be acquired by Japanese technology provider SoftBank Group.
ARM’s chip designs power more than 95 percent of smartphones on the market, including high-end handsets from vendors such as Apple (NASDAQ: AAPL) and Samsung. Even though it is losing money, Sprint shares had risen almost 30% so far this year up to Friday on the basis Softbank would take out the shares it does not own.
Unlike other semiconductor chip companies, ARM specializes in designing small-scale systems made for mobile devices.
The U.K. company’s shares have increased despite the Brexit referendum less than a month ago, when the U.K. voted to leave the European Union.
Under the offer, greeted by the British government as proof that the economy is “open for business”, SoftBank said it was committed to keeping the top managers, ARM’s headquarters and to at least double the employee headcount in Britain.
As for the Brexit point, as Hargreaves Lansdown Senior Analyst, Laith Khalaf pointed out, because only 1% of ARM’s revenues come from the United Kingdom, the falling pound has been accompanied by a strongly rising share price.
The companies expect the closing of the acquisition to occur by the end of September.
Prior to becoming prime minister, May had pledged a “proper industrial strategy” for closer scrutiny of foreign takeovers of British firms.
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Chancellor Philip Hammond reacts to this news by saying that this is not a loss for the United Kingdom, on the contrary, it shows that United Kingdom is still open for business with global investors: “Britain is open for business – and open to foreign investment”.
