Japan’s Softbank to acquire ARM of UK for $31 billion

Japanese major, SoftBank agreed to buy ARM for £24.3 billion, securing a slice of virtually every mobile computing gadget on the planet and future connected devices in the home. This acquisition help SoftBank expand its presence in the growing internet of things (loT).

Beyond its sheer scale, the ARM acquisition is unusual for a company that’s preferred to take control through hefty stakes in smaller companies, or those with high-growth potential.

The company has also wrapped its claws around eAccess, Willcom, OlaCabs, Snapdeal, and DramaFever.

Simon Segars, ARM chief executive, has had to defend the ARM deal against accusations that the United Kingdom is selling off its only top-tier tech company.

Rather, it designs the core engines that get built into others’ chips – chips from companies like Qualcomm and Nvidia as well as processors like Apple’s A9 and Samsung’s Exynos.

The comments come days after May launched her national campaign in Birmingham, stating that the Government should be capable of stepping in when a foreign firm swoops for British businesses that are important to workers and communities. In 2015, it posted revenue of $55.4 billion.

Describing the offer as “compelling” for shareholders, Chambers said: “The board is reassured that ARM will remain a very significant United Kingdom business and will continue to play a key role in the development of new technology”.

Intel’s strategy has merits and strengths, but, “ARM has a totally different business model and different kind of strengths”, said SoftBank CEO Masayoshi Son on Monday. “However, it reduces the amount of cash that SoftBank could commit to the deal, making it marginally more challenging for them to fend off competing offers from Comcast and others”. The deal is not subject to any anti-trust or regulatory conditions.

ARM’s directors will recommend the deal is accepted by ARM shareholders at its forthcoming general meeting. IoT refers to the network of objects that enable interconnected devices such as electronics, software, security cameras to function together.

Goldman Sachs Group and Lazard & Co were the lead financial advisers to ARM on the deal, the company said. SoftBank would be able to provide a level of investment that ARM could not provide on its own, Segars said.

Though it has warned on the staffing impact of Brexit, ARM Holdings’ revenues are largely in dollars, and it has a diverse portfolio of technologies it licenses. New Street Research analysts said that while a tie-up between Sprint and T-Mobile may be in the offing once the incentive auction of 600 MHz is over, the acquisition gives SoftBank fewer resources to pull off such a move.