“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the “Internet of Things”,” said Masayoshi Son, Chairman and CEO of SoftBank.
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Also, while the 43% premium offered for the shares looks a very good price, valuing the firm at around 20 times next year’s EV sales and 50 times next year’s earnings, Bommelaer continued, it is not a fantastic deal as the firm’s prospects were already pretty strong.
He said it was a “British company that determined the next generation microprocessor architecture, that is going to be used in all the next generation phones and – more importantly – in the next generation of the internet of things”.
The Japanese company will retain ARM’s headquarters in Cambridge and plans to double the number of employees in the United Kingdom over the next five years, when it will also increase the company’s headcount outside the United Kingdom.
Over the past year, Arm Holdings’ shares have outperformed Apple’s.
Common sense, as expressed by ARM co-founder Hermann Hauser, said it represented a “sad day” for the UK’s technology sector. However, SoftBank’s shares fell 10% in Tokyo, after the company announced the deal driven by the fact that there is no synergy between the IoT and Telecommunication in near term.
Woodford, now an adviser to western investors on Japan, said: “SoftBank is the one Japanese company I have most respect for”. Since that deal, Sprint’s business performance has been sluggish and its management reconstruction only halfway finished.
Due to this change, ARM might meet some new potential. Widely regarded as the “crown jewel” of the United Kingdom tech industry, ARM has always insisted it would remain independent.
ARM, which was founded in 1990, employs more than 3,000 people. As it stands, unless waiting to sell would result in more favorable long-term capital gains tax treatment, I think ARM shareholders would be wise to take today’s profits off the table and put them to work elsewhere. ARM has opened the doors to a counter in our view. ARM is best left for the irrational, the exuberant or the desperate. It was the only hope of building a British global technology giant after Autonomy got absorbed by HP and CSR was bought by Qualcomm.
May’s official spokeswoman said the swoop “was a clear vote of confidence in Britain” and showed that the country could make a success of leaving the EU.
Prior to becoming prime minister, May had pledged a “proper industrial strategy” for closer scrutiny of foreign takeovers of British firms.
The £24.3bn takeover of ARM Holdings, Britain’s biggest technology company, could be in doubt after investors in the Japanese group behind the deal – SoftBank – gave it the thumbs down.
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Question: Are you planning even larger acquisitions?
