SoftBank to purchase chip designer UK’s ARM Holdings for £24.3bn

Japan’s SoftBank has agreed to buy UK’s Arm Holdings for £24bn in a move that could make the British smartphone chip designer a leader in one of the big technology market, ”the internet of things”. It’s the biggest since Brexit, as it made cheaper for foreign companies like SoftBank to hunt for deals in UK.

SoftBank shares slided 10% after ARM takeover.

Japan’s SoftBank has agreed to buy UK’s Arm Holdings for £24bn in a move that could make the British smartphone chip designer a leader in one of the big technology market, ”the internet of things”. It’s the biggest since Brexit, as it made cheaper for foreign companies like SoftBank to hunt for deals in UK.

Masayoshi Son, the billionaire Japanese technology investor, crystalised his control over his SoftBank Internet conglomerate, last month when he told shareholder he still wanted to “work on few more crazy ideas.” His £24.3 billion deal to acquire ARM Holdings, the British semiconductor designer, would give the Japanese company control of a firm whose chip designs can be found in most of world’s mobile gadgets, from drones to iPhones to a cluster of smart devices and appliances for the home. Simon A Segars, ARM’s chief executive said in an interview “ ARM and SoftBank have an overlap on how we see the future.” This deal is the third-biggest proposed corporate merger this year, behind Bayer’s offer for Monsanto and a Chinese state-owned company’s proposal for Syngenta. This deal if complete, would be the second-largest chip deal on record, after Avago Technologies’ £28.12bn for Broadcom. SoftBank already has ties to ARM through Sprint, the American wireless carrier it controls.

The Cambridge based ARM, a global force in chip design, which was founded 25 years ago, and employs 4000 people, its takeover, by the Japanese telecom group, the largest acquisition of a European Technology business was completed after just two weeks negotiations as SoftBank will pay £17 in cash for each share in Arm, a 45 percent premium to last week’s closing price as shares in Arm surged to £16.78. Arm’s ability to license its technology to other major hardware makers like Apple, Samsung Electronics giving it pervasive presence in mobile devices.

Mr. Son said “First there was the internet, then the mobile internet and next there will be the internet of things, which is going to be the biggest paradigm shift in human history. I am making this investment at the very beginning of this shift”.

SoftBank shares slided 10% after ARM takeover.

Nikkei 225 and broader Topix opened 0.7% higher after the weekend. Shares of Japanese games developer Nintendo also jumped 10% on the continued success of its new augmented reality game Pokemon Go, which has proved to be global hit. The ASX 200 in Sydney was flat headed awaiting the release of minutes from the Reserve Bank of Australia’s June meeting. South Korea’s Kospi is trading 0.3% lower in Seoul. Hong Kong stoks opened 0.3% lower on profit-taking while the Shanghai Composite index fell 0.1%.

Mr Son capped his move with a phone call to Theresa May, the new prime minister and Philip Hammond, Chancellor of the exchequer, offering legally binding assurances to maintain Arm’s headquarters, double its UK workforce in five years and increase its overseas headcount.