SoftBank Shares Plunge More Than 10% After ARM Purchase

The deal marks the biggest ever Asian investment in the United Kingdom and values the technology firm at 1700p per share, a 43% premium on Friday’s closing share price of 1189p.

Its chief executive Masayoshi Son, pictured with ARM chairman Stuart Chambers, said: “ARM will be an excellent strategic fi t as we invest to capture the very significant opportunities provided by the “internet of things”.

Now what: Softbank also stated it not only intends to preserve ARM’s existing organization – including its senior management team, Cambridge headquarters, brand, partnership-based business model, and culture – but also plans over the next five years to “at least double” its employee headcount in the United Kingdom, and increase its headcount by an undisclosed number outside the United Kingdom.

ARM is renowned as an innovator in the “Internet of Things” – its technology is used in the vast majority of smartphones, for example.

At a cost of £23.4 million which is roughly $32 billion, SoftBank is buying out one of the Britain’s most successful technology company ARM Holdings.

Mr Son, whose lucrative early investments include Alibaba, said then that he wanted to “cement SoftBank 2.0”, turn around loss- making Sprint and “work on a few more insane ideas”.

If ARM shareholders and public organizations approve the deal, SoftBank will purchase all of ARM’s shares by the end of September and make the British company its wholly owned subsidiary.

The fall in the pound following the Brexit vote took sterling’s fall against the Japanese yen to more than 30% in the past year, which makes the deal much cheaper for Softbank than first seems.

Unlike other semiconductor chip companies, ARM specializes in designing small-scale systems made for mobile devices.

Within 15 minutes of the deal being announced, Chancellor of the Exchequer Philip Hammond issued a statement saying it showed the strength of Britain’s economy in the wake of the vote to leave the European Union. “SoftBank’s decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth”.

However, as recently as last month, corporate Japan had been readying itself for his exit, as he prepared Nikesh Arora to lead the company into the next information revolution.

Meanwhile, Phil Sharpe, director at Grant Thornton’s Cambridge offices, said it was “disappointing” to see ARM acquired by an overseas buyer but said it was a reflection of the current state of the market.

Before trying to extrapolate any lines from the deal between SoftBank and ARM, it is useful to place it in a broader context.