The Strategist

SoftBank to buy British ARM for $ 32 billion

07/18/2016 - 12:20

Japanese telecommunications company SoftBank Group is ready to buy British corporation ARM, produces processors for mobile devices, Financial Times reported, citing sources familiar with the situation.

MIKI Yoshihito via flickr
MIKI Yoshihito via flickr
Estimated amount of the transaction numbers £ 24.3 billion ($ 32 billion). If the deal goes through, the purchase of ARM will be the largest in the history of European technology. According to sources, SoftBank will offer £ 17 per ARM’s share. This price includes a 43% premium to the value of ARM shares at the close of Friday’s trading. 

ARM's share price has increased by 45% since the beginning of the session on the London Stock Exchange (LSE) on Monday.

The referendum on 23 June, when the British voted for withdrawal from the EU, has called into question attractiveness of the country’s business community. However, the referendum’s outcome did not affect the Japanese company’s intention to close the deal, said the source. ARM Holdings is one of the largest developers and licensors of chips for 32-bit and 64-bit RISC machines-processors, which are used in portable and mobile devices. Fall of the pound sterling against the Japanese yen after the referendum has made the purchase of ARM more profitable.

The Japanese corporation has promised to keep ARM’s headquarters in Cambridge, not to replace the British company’s top management, and at least double number of the company’s employees in the UK over the next five years.

"This is one of the most important acquisitions that we've ever done. I expect that ARM will be one of the most important elements of our business growth, "- said Masayoshi Son, CEO of Softbank.

With help of the new acquisitions, Softbank Corporation expects to strengthen its position in development of microprocessors for smartphones and devices using artificial intelligence.

The acquisition will be financed through SoftBank’s liquidity reserves and attracted credits.

New Minister of Finance of Great Britain Philip Hammond said that Softbank’s investment will be the largest cash injection from Asia to the United Kingdom. According to him, the deal "guarantees doubling of the number of jobs in ARM in the UK over the next five years, and will transform this great British company into a global phenomenon."

"Just three weeks after the decision adopted at the referendum, it (the deal - Ed.) indicates that the United Kingdom has not lost its attractiveness for international investors", - said Hammond.

Japanese SoftBank Group, founded in Tokyo in 1981, is the third largest mobile operator in the country. In 1996, the corporation has invested $ 1 million in Internet company Yahoo! and thus earned $ 3 billion three years later. In 2000, the company invested $ 20 million in Alibaba online retailer, which current price is $ 65 billion.

ARM company was founded in 1990; now it employs 4 thousand people.