ARM, whose headquarter is based in Cambridge, is the largest London-listed tech company by market value.
Advertisement
But Softbank’s stock took a pummelling at the open as the deal aggravated concerns about the Japanese firm’s balance sheet after a string of earlier acquisitions – including its 2013 purchase of still-unprofitable U.S. mobile giant Sprint.
SoftBank shares crashed to 5,387 yen (£38) on the Tokyo Stock Exchange on Tuesday – the lowest they’ve been in around four years – as investors struggled to make sense of the acquisition. Over 15 million devices were shipped past year using ARM tech and they are bullish about powering the internet of things.
This is all a slightly long winded way of saying that SoftBank’s acquisition is likely less a vote of confidence in the United Kingdom and more a very strong vote of confidence in a high quality company with very good long term prospects.
“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”, said Masayoshi Son, chairman and CEO of SoftBank.
The deal would also come just weeks after Britain voted to leave the European Union, a decision that has battered sterling and bolstered the yen.
New chancellor Philip Hammond has welcomed the deal saying that despite the vote to leave the EU, Britain “has lost none of its allure to global investors”.
Under the offer backed by ARM’s board, Softbank will pay £17 for every ARM share – a premium of more than 40 per cent to Friday’s close. “It is a clear demonstration that Britain is open for business, as attractive to worldwide investment as ever”.
ARM Holdings may not be a household name, but it is likely that one of the company’s chip designs powers your smartphone, tablet, or other mobile device.
Son also said during a news conference Monday that his confidence in a Sprint turnaround helped pave the way for the blockbuster acquisition, according to Reuters. “That’s three months of the UK’s current account deficit financed in one fell swoop”, said Kit Juckes, head of currency strategy at Societe Generale.
“The proposed sale to SoftBank is a sad day for me and for technology in Britain”, he added.
SoftBank has pledged to embark on a major recruitment drive and hold on to ARM’s existing management team following its swoop for the British tech firm, which supplies technology for Apple’s iPhone.
More recently, ARM started to branch out into the Internet of Things (IoT) market, super small, low-powered devices that integrate with anything and everything – from cookers and fridges, to drones and doorbells, connecting them all together and accessible from any computer over the Internet. SoftBank approached ARM, which didn’t run an auction process, two people familiar with the matter said before the announcement.
“It has a very strong presence within the mobile phone market, but it has been making inroads into the internet of things”.
Advertisement
ARM’s business module itself relies on the company licensing its designs to hardware manufacturers such as Samsung and HTC.
