Son said he had been following ARM for the last 10 years and decided now was the right time to invest in a firm that provides the technology in almost all smartphones including Apple’s iPhone and Samsung’s Galaxy.
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ARM centers its business on intellectual property, especially in mobile computing, rather than chip manufacturing, for which it relies on partners.
As part of the deal, Softbank committed to doubling the number of ARM employees in the United Kingdom over the next five years.
Mark Thierfelder, a partner at a private equity firm called Dechert noted that foreign buyers of United Kingdom assets could be attracted to the immediate discount they now get given the national currency’s plunge following the Brexit vote.
He added: “The concern of brain drain and ARM business moving from the United Kingdom must be considered in this equation based on its know-how and leadership in chip design”.
Shares in Japan’s Softbank have fallen 10% after it agreed a controversial £24.3bn deal to buy United Kingdom microchip designer ARM Holdings.
The deal discussions started as a result of an approach from SoftBank, and ARM didn’t run an auction process, two people said. The deal will improve the Japanese telecommunications giant’s portfolio in mobile internet. It has the potential to be a leader in the “internet of things”, when devices are given web connectivity.
Its chief executive Masayoshi Son, pictured with ARM chairman Stuart Chambers, said: “ARM will be an excellent strategic fi t as we invest to capture the very significant opportunities provided by the “internet of things”.
“ARM has long-term contracts with its customers so I wouldn’t expect anything to change quickly, but all bets are off for the next generation architecture”, said Patrick Moorhead, president and principal analyst at Moor Insights & Strategies.
Earlier this year, Cambridge-based ARM bought the United Kingdom imaging specialist Apical, which specialises in technology to allow computers to analyse images – replicating human vision using software.
New Chancellor Philip Hammond said of the deal: “Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to worldwide investors”.
The acquisition will also be SoftBank’s largest to date, and will be implemented through a court-sanctioned “scheme of arrangement” which must be approved by at least 75% of ARM shareholders by November 17, 2016.
Also, while the 43% premium offered for the shares looks a very good price, valuing the firm at around 20 times next year’s EV sales and 50 times next year’s earnings, Bommelaer continued, it is not a fantastic deal as the firm’s prospects were already pretty strong.
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Philip Hammond, Ms May’s new Chancellor, said that the deal will turn a “great British company into a global phenomenon”.
