ARM Holdings is to be purchased by Japan’s Softbank. According to many, the consequences of the UK leaving the EU have been exaggerated and this initiative by Softbank confirms this. The $32 billion deal was confirmed this week and the offer is around 43% above the closing market valuation of £16.8 ($22.4 billion) price Friday.
ARM Holdings is a technology development and manufacturing company based in Cambridge, England, and designs the microchips that are used in cell phones such as Samsungs and iPhones. Founded in 1990, the company employs over 3,000 people and is regarded as a significant strategic purchase by the Japanese firm. The ARM board is expected to make a recommendation to shareholders that they accept the offer. Not to do so would be madness, to be honest, because it is an excellent offer that shareholders would be unlikely to see again.
Shares in ARM surged to 1,742.85 for each share, a 45% increase, and adding £7.65 billion to the market value of the company. The headquarters of the company would remain in Cambridge, and staff numbers are expected to double over the next 5 years.
Softbank is Japanese company focused on technology, and is in fact one of the world’s largest technology companies. It is run by Masayoshi So, the Japanese entrepreneur who founded it. It is not an unknown company – on the contrary!
It previously purchased the Japanese operation of Vodafone, and also acquired Sprint, the US telecoms firm in a deal worth $20 billion, the largest Japanese acquisition of a foreign business at the time. This deal for ARM Holdings is to be funded by the cash reserves of Softbank and also by a long term loan from the Mizuho Bank in Japan.
The deal is an extremely important one for the UK technology sector, but could also be cathartic in that the UK technology industry could ultimately lose its independence from outside interference. This is not the first innovative British technology company that has been eaten up by a giant (think Cambridge Silicon Radio bought by CRS, and Autonomy ruined by HP) and it will no doubt not be the last.
However, it is a deal of its time and offers badly needed finance to the company that needs it to progress. Aldebaran Robotics in France was purchased by Softbank, and it has since gone on to greater things under the control of the Japanese firm.
Softbank bought France’s Aldebaran robotics business and has gone on to give it a global profile. However, ARM was the last British technology company with a global reach, and will no longer be British! Nevertheless, ARM will continue to manufacture in Britain, pay British salaries and pay British taxes. UK Prime Minister Theresa May says the deal shows that the UK’s economy can thrive outside the EU.
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