Brit-tech success poster child ARM holdings is to be acquired by Japanese telecom multinational Softbank.
ARM, whose chip designs drive the majority of the world’s smartphones, is under offer for a remarkable £24.3bn - a premium of 43 per cent over current stock price.
Softbank, whose last yearly revenue totalled 19.5 trillion Japanese yen ($84bn, £63bn), is paying £17 per share for the intellectual property powerhouse.
The Japan giant has committed to “at least” a doubling of ARM’s existing UK workforce, in addition to continued investment in the country, in addition to overseas expansion over the next five years.
ARM’s UK headcount, mostly centred in Cambridge, numbers around 3,000.
Further, the giant has promised to preserve ARM’s existing senior management team, the firm’s structure and partnerships. Anything else would, frankly, have been a shot in the foot for Softbank given ARM’s success.
The offer will now be put to shareholders, with ARM's board planning to recommend acceptance.
Softbank called ARM an “excellent strategic fit within the Softbank group as we invest to capture the very significant opportunities provided by the internet of things”.
Founded in 1990 as a spin-out from an Acorn collaboration with Apple, ARM has carved out a reputation for designing fast and efficient microprocessors that generate relatively little heat.
ARM designs are licensed by Toshiba, Taiwan Semiconductor and among others. Its processor designs are present in iPads, iPhones and Android devices, which in a short period have come to dominate not just mobile computing but computing as a whole as the PC market has fallen in sales and significance.
ARM designs are used in 95 per cent of the world’s smartphones, 10 per cent of its tablets and 35 per cent of digital TVs.
The deal is significant not just from a technology perspective, but also a British political one.
Coming so soon after the British people’s vote to leave the European Union and follow-on concern over trade and business, the quick out the gate have been keen to stress business as usual and welcome the Softbank news as vote of confidence in the British economy.
New chancellor of the Exchequer Philip Hammond Tweeted:
Decision by SoftBank to invest in @ARMHoldings shows UK has lost none of its allure to global investors - Britain is open for business— Philip Hammond (@PHammondMP) July 18, 2016
Prime Minister Theresa May, however, before ascending to power, laid her cards on the table in terms of what she wanted when it comes to British firms being bought by overseas players.
ARM-Softbank is not a hostile takeover, but ARM is a significant British business and tech company.
Also, with the pound's fall in value against other currencies since the Brexit vote, Softbank will today be paying less than it would have just before June 23. On June 23 it was 160 JPY to the pound versus 140 today, so down 12.5 per cent since the vote and down 21 per cent against the Yen since the start of 2016.
Speaking before becoming PM, May articulated the need for: “A proper industrial strategy that wouldn't automatically stop the sale of British firms to foreign ones, but [which] should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain.” ®