The board of ARM is expected to recommend shareholders accept the Softbank offer – which provides a 43% premium on its closing market value of £16.8bn on Friday.
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Before trying to extrapolate any lines from the deal between SoftBank and ARM, it is useful to place it in a broader context.
While the fall of the pound following the Brexit vote may have facilitated the buyout, Softbank also announced today that it has entered into a bridge loan deal for up to 1 trillion yen to help finance the deal.
According to Bloomberg News’ Jeff McCracken, SoftBank may have only began to look at acquiring ARM Holdings after the vote took place.
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. It manufactures iPhones, chips and other technology that is licensed to other firms.
Sprint shares fell more than 6% overnight after investors realised the deal with Arm would mean no mop up offer from Softbank for a while.
ARM develops and licenses technology central to digital electronic devices, including those made for Apple’s fierce rival Samsung.
Softbank, a technology conglomerate, based in Japan will make use of the Arm’s semiconductor design expertise to enhance its Internet of Things division. “ARM is an outstanding company with an exceptional track record of growth”.
ARM Holdings, which employs 3,000 people in the United Kingdom, saw its results come in ahead of expectations in April as pre-tax profits lifted 14% to £137.5 million in the first quarter year-on-year, while revenues also stepped up 22% to £276.4 million over the period.
No one can deny the British company’s reach-ARM-designed chips are everywhere, Recode notes. The agreement, disclosed yesterday, underlines SoftBank’s desire to expand in the Internet of Things, which refers to how nearly anything these days has become a computer device that can connect online.
“SoftBank intends to invest in ARM, support its management team, accelerate its strategy and allow it to fully realise its potential beyond what is possible as a publicly listed company.” .
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The British government also released a positive statement regarding the deal, saying it showed that Britain remains open for business. It has struggled trying to turn around its US mobile company Sprint Corp., although Son says there is progress on that.
