18th Jul 2016 07:35
LONDON (Alliance News) - Chipmaker ARM Holdings PLC confirmed it has reached an agreement to be acquired by Japan's SoftBank Group Corp for GBP24.3 billion in cash, sending its shares rocketing higher in early trade on Monday.
The FTSE 100 tech firm, which makes chips used in smartphones and other connected devices, said SoftBank will pay 1,700.00 pence per share in cash, a 43% premium to ARM's closing price on Friday of 1,188.73p and a 42% premium to the all-time high that ARM shares hit in March 2015.
ARM's board said it unanimously recommends the offer, which will be the largest ever acquisition of a European technology company. The Financial Times, which first reported the deal, quoted Philip Hammond, the UK's newly-appointed Chancellor of the Exchequer, saying the deal will turn "great British company" ARM "into a global phenomenon".
ARM shares were up 44% to 1,708.00 pence early Monday, by some distance the best performer in the blue-chip index and a slight premium to the agreed takeover price.
SoftBank is a Japanese technology and telecommunications conglomerate. It owns a majority stake in US mobile carrier Sprint Corp and owns Yahoo Japan, the most popular internet search engine in the country.
SoftBank said it will back ARM's position as a global leader in intellectual property licensing and research and development outsourcing in the semiconductor industry. The Japanese group said its global network will help to accelerate the adoption of ARM's intellectual property in existing and new markets.
In addition, SoftBank said it will maintain the existing long-term focus within ARM on driving more value per device in which its technology is used, increasing licensing wins and boosting future royalty streams in new growth markets.
This will focus on the internet of things, a growing segment of the technology sector by which everyday household objects, like kettles or toasters, will become connected devices, controlled via smartphones.
"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"," said SoftBank Chairman and Chief Executive Masayoshi Son.
SoftBank also said it plans to support ARM's growth by investing in recruiting engineering talent and through bolt-on, complementary acquisitions. It said it believes this will be easier to execute with ARM as a private entity rather than a listed company.
SoftBank said it intends to keep ARM's existing management team and brand in place and will maintain the company's headquarters in Cambridge. It plans to at least double ARM's UK headcount over the next five years and will boost the group's employee numbers internationally too.
"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," SoftBank boss Son said.
"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," he added.
"It is the view of the board that this is a compelling offer for ARM Shareholders, which secures the delivery of future value today and in cash. The board of ARM is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology," ARM Chairman Stuart Chambers.
"The board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens," Chambers added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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