UK's Technology Firm ARM Holdings to be Bought by Japan's Softbank

July 20, 2016


BBC and Reuters report:

Japan's SoftBank will buy Britain's most valuable technology company ARM for £24bn ($32bn) in cash. ARM shares surged by 45% at the opening of the London Stock Exchange to 1,742.85p per share, adding £7.56bn to ARM's market value.

ARM said it would keep its headquarters in Cambridge and that it would at least double the number of its staff over the next five years.

Softbank is one of the world's biggest technology companies and is run by its founder, Japanese entrepreneur Masayoshi Son.

It has previously acquired Vodafone's Japanese operations and the US telecoms company Sprint. The $20bn deal was the biggest foreign acquisition by a Japanese firm at the time.

The new deal will be funded by Softbank's own cash reserves and a long term loan from Japan's Mizuho Bank.

The deal has sent sterling down 11 percent against both the dollar and yen. While the drop has made British assets much cheaper for foreign investors, the chief of the telecoms and internet group played down any suggestion that this was an opportunistic deal.

Son said he had been following ARM for the last 10 years and decided now was the right time to invest in a firm that provides the technology in nearly all smartphones including Apple's iPhone and Samsung's Galaxy.

ARM is also poised to play a central role in the tech industry's shift to the 'internet of things' (IoT) - a network of devices, vehicles and building sensors that collect and exchange data - a stated focus for SoftBank founder and CEO Son.

"ARM will be the center of the Internet of Things, in which everything will be connected," he told reporters. "IoT is going to be the biggest paradigm shift in human history (and) we have always invested at the beginning of every paradigm shift."

The ARM deal is one of Japan's biggest overseas ventures and the latest in a parade of Japanese companies seeking growth abroad as the domestic economy stagnates.

From a British point of view, the capital investment is so big that it covers approaching three months of the country's huge current account deficit, according to Kit Juckes, head of currency strategy at Societe Generale.

British politicians have objected in recent years to some international takeovers including Pfizer's failed bid to buy AstraZeneca and the successful move by Kraft to buy British chocolatier Cadbury.

But Son spoke to British Prime Minister Theresa May over the weekend and within minutes of SoftBank announcing the deal on Monday the government released a statement saying it showed Britain remained open for business.

Sources: 18 July 2016, BBC Online http://www.bbc.com/news/business-36822806 and Reuters Online http://www.reuters.com/article/us-arm-holdings-m-a-softbank-group-idUSKCN0ZY03B

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