SoftBank to acquire ARM for $32B, eyes IoT portfolio boost

by Abhinav Mohapatra

Japan-based multinational telecommunications and internet corporation, SoftBank, has agreed to buy British semiconductor and mobile microprocessor company, ARM for $32.5 billion (£24bn), in an all-cash deal. The acquisition is expected to close in the third quarter of 2016 and is subjected to shareholder and regulatory approvals. Under the terms of the acquisition, SoftBank will pay $22.43 (£17) per share to shareholders for the entire issued share capital of ARM. Part of the consideration payable under the transaction is being financed by debt provided under a $149 billion (¥1 trillion) facility from Mizuoh Bank. The balance is being funded by SoftBank’s existing cash resources. UK-based ARM produces mobile processors and semiconductor designs including licensing an array of Cortex-branded processor cores that are suited for use in internet-connected devices. It claims to collect data and swap it with other online appliances and cloud services. These cores have found a place in Apple iPhones and Samsung android handsets. The firm also claims to offer a range of other hardware designs and software aimed at the IoT market, such as its Cordio low-power radio and its mBed Device Server software for securely managing IoT networks. Stuart Chambers, Chairman, ARM, said:
It is the view of the Board that this is a compelling offer for ARM Shareholders, which secures the delivery of future value today and in cash. The Board of ARM is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology.
“SoftBank has given assurances that it will invest considerably in the business, including doubling the UK headcount over the next five years and maintaining ARM’s unique culture and business model. ARM is an outstanding company with an exceptional track record of growth. The Board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens,” Chambers added. SoftBank claims to have pledged the same and will at least double the number of ARM employees in the U.K. over the next five years, as part of a plan to grow the company through continued R&D investment and complementary acquisitions. Reportedly, it will also expand its IP-licensing model to new markets, focus on long-term value per device, and invest on ARM’s presence in the UK. Masayoshi Son, CEO, SoftBank, plans to retain ARM’s management team and will keep the company’s headquarters based in Cambridge in the UK. In a release, he said:
We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market leader in its field. 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.
“As an integral part of the transaction, we intend to at least double the number of employees employed by ARM in the UK over the next five years.” He added. He also stated that Brexit, in no way influenced the acquisition and the board at SoftBank was long interest in buying out ARM. According to the company, this is its largest takeover till date. Earlier it had acquired Sprint for $21.6 billion. It also has a stake in Chinese e-commerce giant Alibaba and humanoid robot ‘Pepper‘. It is interesting to note that SoftBank is acquiring ARM without any footing in the semi-conductor space. Not very long ago, Son had revealed his plan of holding onto his position as SoftBank CEO and work “on some crazy ideas”. Precisely why former Google veteran, Nikesh Arora, his successor-in-hold, stepped down. Considering it as an opportune moment, Philip Hammond, U.K Chancellor also commented on the deal and expressed his consent of Britain, still being open to foreign business. Although Hermann Hauser, Founder, ARM has a different tale to tell. He tweeted: In an interview to BBC, Hauser, claimed that his technology firm had sold 15 billion microchips in 2015, which was more than US rival Intel had sold in its history. He also continued to say that the result of the SoftBank deal meant the “determination of what comes next for technology will not be decided in Britain any more, but in Japan.”