The week starts with another massive M&A activity announcement. Japanese telecom giant SoftBank announced it's taking over British chip designer ARM Holdings for £23.4 billion (roughly $31 billion). ARM shareholders will receive £17 in cash for each share, representing a 43 percent premium versus last week's closing price. It is the largest purchase ever of a European tech company.
In an effort to appease the UK's new government, SoftBank promises it will maintain the HQ of ARM in Cambridge and pledges to at least double the employee headcount in the UK over the next five years, from roughly 1,500 to 3,000, while also growing the headcount outside the UK.
The Japanese firm is making a big bet on the Internet of Things with this wildly expensive buyout offer, the purchase price is equivalent to over 48 times what ARM is expected to earn this year.
Commenting on today’s Announcement, Masayoshi Son, Chairman and CEO of
“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.”
While not a household name in the West, SoftBank is a large Japanese corporation. It has a 28 percent stake (worth $65 billion) in Chinese Internet giant Alibaba and a 77 percent stake in US telcom Sprint Nextel.