SoftBank Group Corp. has agreed to buy UK chip designer ARM Holdings PLC in a £24.3 billion cash deal, the two sides said yesterday, a bold bet on internet-connected machines that will transform the Japanese group.
ARM, the largest London-listed tech company by market value, is a major presence in mobile processing, with its processor and graphics technology used by Samsung, Huawei and Apple in their in-house microchips.
Components based on technology licensed by ARM are found in the vast majority of the world’s smartphones, and the Cambridge-based group has branched into other connected devices as smartphone growth slows.
ARM stands to be central to the tech industry’s shift to the ‘internet of things’ – a network of devices, vehicles and building sensors that collect and exchange data – a stated focus for SoftBank founder Masayoshi Son.
Yesterday’s deal, Softbank’s largest to date, marks a departure for the Japanese group, whose tech and telecom portfolio ranges from US carrier Sprint to a stake in Chinese e-commerce giant Alibaba and humanoid robot Pepper – but does not yet include a major presence in the semiconductor industry.
Under the offer backed by ARM’s board, Softbank will pay £17 for every ARM share – a premium of more than 40 per cent to Friday’s close.
ARM shares surged nearly 43 per cent to £16.99 by 0820 GMT.
“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,” Son said in the statement.
The acquisition is the first for Son, 58, since he last month rescinded plans to retire – effectively pushing out his heir apparent, former Google executive Nikesh Arora.
Son, whose lucrative early investments include Alibaba, said then that he wanted to “cement SoftBank 2.0”, turn around loss-making US carrier Sprint and “work on a few more crazy ideas”.
Though he has a low profile outside Asia, Son has long been an unconventional, charismatic visionary in the often closed and clubby world of corporate Japan, turning profits from Japanese telecoms into bets on up-and-coming start-ups.
Not all have been a success: SoftBank’s $22 billion acquisition of a controlling stake in loss-making Sprint in 2013 has left the group with hefty debts.
SoftBank had interest-bearing debt of 11.9 trillion yen at end-March, including four trillion yen at Sprint, and its net debt currently stands at 3.8 times core earnings.