SoftBank may eventually try to get ARM chips into the servers that power its own telecommunications gear, or boost the license fee ARM gets from those that use its designs, Krewell said.
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Son described the deal as a bet on the “Internet of things,” a new stage in the evolution of network technology, when cars, buildings, and household items may be connected through embedded electronics.
The purchase, announced yesterday, is SoftBank’s largest takeover to date and piles on more debt at the Japanese tech and telecoms group, whose investments have ranged from United States carrier Sprint to Chinese e-commerce giant Alibaba. “ARM will be an excellent strategic fit within the Softbank Group as we invest to capture the significant opportunities provided by the Internet of Things”. Softbank is the majority shareholder at Sprint.
British politicians have objected in recent years to some global takeovers including Pfizer’s failed bid to buy AstraZeneca and the successful move by Kraft to buy British chocolatier Cadbury.
But SoftBank Chief Executive Masayoshi Son told reporters in London that the currency effect was neutral for the agreement because although the pound weakened, the share price had gone up after Brexit.
The data was collected nearly entirely before Britons voted to leave the European Union on June 23.
“SoftBank is going to pay 43% premium for ARM, which is seen by the market as overpaying and is weighing on SoftBank share prices”.
Shares in ARM Holdings jumped 42% following the announcement.
“My first impression was that the purchase made investors anxious about SoftBank being able to receive synergies from the purchase of ARM and collect all the cash it spent”, said Masayuki Kubota, chief strategist at Rakuten Securities.
ARM has been working on automotive projects, which could drive a lucrative new income stream as manufacturers work towards safer, more fuel-efficient and ultimately self-driving vehicles.
Woodford, now an adviser to western investors on Japan, said: “SoftBank is the one Japanese company I have most respect for”. It has struggled trying to turn around Sprint, although Son says there is progress on that.
SoftBank said the ¥1 trillion loan extended from Mizuho Bank in connection with the acquisition of ARM can mostly be covered by the proceeds from its planned divestitures.
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At a news conference, however, Softbank founder and CEO Masayoshi Son played down the suggestion it was an opportunistic deal, reports Reuters, instead stating he had been following the company for the last ten years and decided now was the right time.
