SoftBank said its board approved the deal, but ARM shareholders and the English courts still need to approve it. ARM has recommended the deal be approved by its shareholders.
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The deal, which SoftBank hopes to complete by the end of September, has a few steps pending.
ARM stands to be central to the tech industry’s shift to the “internet of things” – a network of devices, vehicles and building sensors that collect and exchange data – a stated focus for SoftBank founder Masayoshi Son. If a foreign investor, especially one as ambitious as Mr Son, wants to bet his company on a deal like this, is that not a ringing endorsement of the strength of Britain’s technology credentials rather than a sign of its weakness?
ARM’s revenues meanwhile jumped 15 percent to nearly $1.5 billion a year ago on the design of chips used also in computer servers.
The acquisition will be the biggest yet for SoftBank, whose operations span telecoms, including USA carrier Sprint, to robotics and clean energy.
The surprise move will help Softbank gain a solid foothold in the Internet of Things, considered the next major wave of development in the enterprise computing business. And Masayoshi Son, chairman and chief executive of SoftBank said in a statement: “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”.
Though it has warned on the staffing impact of Brexit, ARM Holdings’ revenues are largely in dollars, and it has a diverse portfolio of technologies it licenses. He said ARM’s high-margin business model has been effective, and it’s also the company that’s made it possible to do stuff like watch streaming video on your phone without draining the battery immediately.
May had given her backing on Sunday after talking with Son, whose company has vowed to double ARM’s British workforce and keep its headquarters in the university city of Cambridge. I believe that if investors can wait five years, they will understand that our acquisition was a correct judgment.
“As time goes by, before they know it, they’ve become mere assemblers, and their profit margins steadily shrink”, the chairman said.
The deal marks the biggest ever Asian investment in the United Kingdom and values the technology firm at 1700p per share, a 43% premium on Friday’s closing share price of 1189p.
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Meanwhile, Phil Sharpe, director at Grant Thornton’s Cambridge offices, said it was “disappointing” to see ARM acquired by an overseas buyer but said it was a reflection of the current state of the market.
