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SoftBank acquires ARM in £24bn deal

July 18, 2016

By Colin Mann

Japanese telecommunications and Internet corporation SoftBank Group (SBG) and UK chip manufacturer ARM Holdings (ARM) have agreed a deal under which SBG will acquire 1,412 million shares of ARM with a total acquisition price amounting to approximately £24 billion (€28.74bn).

The acquisition, which has been approved at a meeting of SBG’s Board of Directors, is subject to the approval of ARM’s shareholders and of the English court. ARM’s Board of Directors has unanimously confirmed that it intends to recommend the Acquisition to ARM’s shareholders.

The companies expect the closing of the Acquisition to occur as soon as practicable in the third calendar quarter 2016 (the period ending September 30th 2016). As a result of the Acquisition, ARM will become a wholly-owned subsidiary of SBG.

SBG believes ARM is one of the world’s leading technology companies, with strong capabilities in global semiconductor intellectual property and the ‘Internet of Things, and a proven track record of innovation.

The board and management of SBG have evaluated ARM in detail and after careful consideration unanimously support this transaction. The board and management of SBG believe that the acquisition of ARM by SBG will deliver the following benefits:

  • Support and accelerate ARM’s position as the global leader in intellectual property licensing and R&D outsourcing for semiconductor companies

SBG’s deep industry expertise and global network of relationships will accelerate adoption of ARM’s intellectual property across existing and new markets.

  • Maintain ARM’s dedication to innovation

SBG intends to sustain ARM’s long-term focus on generating more value per device, and driving licensing wins and future royalty streams in new growth categories, specifically ‘Enterprise and Embedded Intelligence’.

  • Increased investment to drive the next wave of innovation

SBG intends to support ARM’s multiple growth initiatives by investing in engineering talent and complementary acquisitions with the aim of ensuring ARM maintains a R&D edge over existing and emerging competitors. SBG believes such an investment strategy in long-term growth will be easier to execute as a non-listed company.

  • Shared culture and long-term vision

SBG believes the two companies share the same technology-oriented culture, long-term vision, focus on innovation and commitment to attracting, developing and retaining top talent. These common values will be the foundation for the strong strategic partnership necessary to capture the significant opportunities ahead.

  • Maintain and grow the UK’s leadership in science and technology

SBG is investing in the UK as a world leader in science and technology development and innovation and, as evidence of this, intends to invest in multiple ARM growth initiatives, at least doubling the number of ARM employees in the UK over the next five years.

Under the terms of the Acquisition, each ARM shareholder will be entitled to receive 1,700 pence in cash for each ARM share.

The consideration values the entire existing issued and to be issued share capital of ARM at approximately £24.3 billion.

Masayoshi Son, Chairman and CEO of SBG, 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’.

This investment also marks our strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent in Cambridge. 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.

SoftBank intends to invest in ARM, support its management team, accelerate its strategy and allow it to fully realise its potential beyond what is possible as a publicly listed company. It is also intended that ARM will remain an independent business within SoftBank, and continue to be headquartered in Cambridge, UK.

This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

Stuart Chambers, Chairman of 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.”

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