Japan’s Softbank buys Britain’s ARM Holdings for $31 billion
Japanese technology company SoftBank Group Corp. is buying British ARM Holdings for $31 billion in a deal the British government hailed Monday as a vote of confidence in the country following last month’s vote to leave the European Union.
The recommended cash deal underlines SoftBank’s desire to expand in the so-called Internet of Things, which refers to how a multitude of home devices from smart-thermostats to security cameras and domestic appliances can connect online and work in sync.
ARM, which is the biggest-listed technology company in Britain, has a world-renowned reputation as an innovator in the Internet of Things — its technology is used in most smartphones, for example.
“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,” said Masayoshi Son, chairman and chief executive of SoftBank.
ARM centers its business on intellectual property, especially in mobile computing, rather than chip manufacturing, for which it relies on partners. Its technology is used in 95% of smartphones and 80% of digital cameras, according to the company. Augmented-reality headsets, biometric sensors, self-driving cars, commercial drones and smart watches all use ARM technology.
Philip Hammond, Britain’s new Treasury chief, said the deal shows that Britain has “lost none of its allure to international investors” in the wake of the June 23 vote to leave the European Union.
The vote for “Brexit” has raised fears that the British economy will suffer. A raft of evidence already shows consumer and business sentiment has taken a hit since the vote, prompting some economists to warn that the country is heading for recession.
One major effect of the Brexit vote has been a big fall in the value of the British pound, but SoftBank’s Son said his company wasn’t buying ARM on the cheap given that its share price had actually risen since the vote, offsetting any influence from the currency’s fall.
SoftBank’s offer represents a 43% premium to ARM’s closing share price on Friday.
The deal, which SoftBank said it hopes to complete by the end of September, has a few steps pending. ARM shareholders, who have been advised by the board to accept the offer, and the English courts still need to give their backing.
SoftBank, a mobile carrier in Japan, also runs a solar-based utility and a humanoid robot business. It has struggled trying to turn around its U.S. mobile company Sprint Corp., although Son says there is progress on that.
