Softbank to acquire UK chipmaker ARM Holdings for $32 bn
18 July 2016
Japan's Softbank has agreed to acquire ARM Holdings, one of Britain's leading technology companies, in a deal worth £24.3 billion ($32 billion) the biggest foreign takeover by a Japanese company.
Under the all-cash deal, Softbank will acquire 1,412 million shares of ARM, including the entire issued and to be issued share capital of ARM, at a total acquisition price of approximately £24.3 billion (approximately $32 billion or JPY 3.3 trillion) by means of a court-sanctioned scheme of arrangement.
Softbank is offering £17 per ARM's share giving ARM shareholders a 43 per cent premium on Friday's closing share price and a 41.1 per cent premium on the all-time high share price.
The cash purchase has been agreed to by the boards of both companies, giving a big boost to Softbank CEO Masayoshi Son's plans on mobile communications and the `Internet of Things'.
ARM, based in Cambridge, is a leader in mobile computing, designing technology used in popular smartphones, including Apple's iPhone.
Son told reporters that the acquisition was his "big bet for the future," adding that ARM was well positioned to capitalise as more and more devices are connected to the internet.
"This is the company I've wanted to for 10 years," he said. "The 'Internet of Things' is growing big time."
Softbank said the two companies have reached an agreement on the terms of a recommended
The acquisition, which has been approved at a meeting of SBG's board of directors, is subject to the approval of ARM's shareholders. ARM's board of directors has unanimously confirmed that it intends to recommend the acquisition to the company's shareholders.
The companies expect the acquisition to close as soon as practicable in the third calendar quarter 2016 (the period ending 30 September 2016). With the acquisition, ARM will become a wholly-owned subsidiary of SBG.
SBG said the acquisition of ARM will support and accelerate ARM's position as the global leader in intellectual property licensing and R&D outsourcing for semiconductor companies. SBG's deep industry expertise and global network of relationships will accelerate adoption of ARM's intellectual property across existing and new markets, it said.
Coming together of the two companies will accelerate ARM's leadership in technologies for the future and help create over 1,500 additional ARM jobs in the UK over the next five years and increase headcount outside the UK, according to Softbank.
SBG intends to sustain ARM's long-term focus on generating more value per device, and driving licensing wins and future royalty streams in new growth categories, specifically ''Enterprise and Embedded Intelligence.''
SBG plans to support ARM's multiple growth initiatives by investing in engineering talent and complementary acquisitions with the aim of ensuring ARM maintains a R&D edge over existing and emerging competitors. Such an investment strategy in long-term growth will be easier to execute as a non-listed company, it added.
The ARM takeover comes less than a month after the UK voted to leave the European Union, a shock event that hnas rattled investors and caused the Sterling to plummet.
Son said he had discussed the deal with UK officials, and found them to be receptive. Philip Hammond, the UK's new Treasury chief, said the takeover showed that "Britain has lost none of its allure to international investors."
Softbank, which also owns a controlling stake in US telecom Sprint (S), has been raising cash in recent months. In June, the company announced a plan to unload roughly $8 billion in Alibaba shares.
Softbank Group Corp on Friday said it has entered into a loan agreement for a maximum amount of JPY 1.0 trillion to finance a portion of the consideration payable in the acquisition of ARM Holdings plc.