SoftBank targets IoT potential with US$31bn ARM buy

By Tony Chan

The SoftBank Group Corp announced it is putting in a bid for UK-based chip designer ARM Holdings for £24 billion, or roughly US$31 billion, in a move targeting the future potential of the Internet of Things.  The companies said they had reached agreement on the terms of an all cash acquisition of the entire issued and to be issued share capital of ARM, which designs the processing cores of the majority of the world’s mobile devices. SoftBank now aims to expand ARM’s technology position in mobile processing into new segments and markets.  Under the scope of the agreement, SoftBank will acquire 1,412 million shares of ARM at a premium of some 43% to the semiconductor giant’s market value prior to the announcement. After the acquisition, SoftBank intends to delist ARM, which will become a wholly-owned subsidiary of SoftBank.

The deal has the approval of the SoftBank board and the endorsement of the ARM board, but still needs the nod from ARM’s shareholders and the relevant regulatory agencies.  SoftBank CEO Masayoshi Son described the deal as “one of the most important acquisitions” the company has ever made.  “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’,” Son said.

“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… I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

As part of the announcement, Son said the company intends to “at least double the number of employees employed by ARM in the UK over the next five years” to show its commitment to “maintain and grow the UK’s leadership in science and technology.”  At least part of those hires will consists of “engineering talent” to ensure ARM’s R&D capabilities stay ahead of its competitors, SoftBank said, adding that it also intends to make “complementary acquisitions” for similar reasons.

Also part of the announcement, SoftBank laid out several directions it intends to take to further develop ARM’s global market position and business. First, SoftBank said it aims to tap into its own “deep industry expertise and global network of relationships” to expand ARM’s intellectual property across existing and new markets. SoftBank also intends to maintain ARM’s “long term focus on generating more value per device” and tap into new growth categories, specifically “enterprise and embedded intelligence.”

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