Japanese major, SoftBank agreed to buy ARM for £24.3 billion, securing a slice of virtually every mobile computing gadget on the planet and future connected devices in the home.
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SoftBank lost more than a tenth of its market value as the Japanese conglomerate’s shareholders gave an initial thumbs down to its £24bn takeover of the UK’s ARM Holdings.
Investors remain concerned about SoftBank’s balance sheet and the hefty premium it’s forking over. Softbank owns a $US65 billion stake in Chinese internet commerce giant, Alibaba (which cost just $US20 million) and Vodafone Japan, which was bought in 2006 for $US15 billion.
But it had more than $100 billion in debt at the end of March.
In a sign investors may think otherwise, the yield on SoftBank’s 5.375 percent USA dollar bonds jumped 30 basis points Monday, the biggest increase since the notes were sold in July 2015, to 4.35 percent, according to prices compiled by Bloomberg.
Analysts also expect more British firms to become foreign takeover targets, with the plunge in the value of the pound making United Kingdom firms cheaper following the Brexit vote.
But the deal left some analysts scratching their heads. The deal will require further regulatory approval.
In morning trade, the benchmark Nikkei 225 index climbed 0.69 per cent, or 114.24 points, to 16,612.09 at the open, while the broader Topix index of all first-section shares gained 0.68 per cent, or 8.96 points, to 1,326.06.
“It is mostly about the weak yen supporting stocks again – the equity market will continue tracking currencies closely”, said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. The dollar was at 105.92 yen in Tokyo, against 106.14 yen in NY but well up from the levels around 100 yen seen at the start of the month.
SoftBank, which also owns USA telecommunications vendor Sprint, has been looking to expand into the IoT and ARM’s intellectual property works not in just smartphones (its technology is used in 95% of smartphones) but also digital cameras, augmented reality, biometric sensors, drones, smart watches and much more.
Japanese financial markets were closed Monday for a public holiday.
Nintendo soared 14.36 percent to 31,770 yen, becoming more valuable than Sony.
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McDonald’s Japan jumped 5.26 percent to 3,200 yen after it started giving away Pokemon figurines with sales of Happy Meals on Friday.
