Softbank buying chip maker ARM in $31 billion deal

By midian182 · 10 replies
Jul 18, 2016
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  1. Softbank, the Japanese multinational telecommunications corporation, has agreed to acquire British chip design company ARM Holdings for £23.4 billion (about $31 billion), according to multiple publications. Assuming the deal goes through, it will mark the largest ever purchase of a European tech firm.

    ARM licenses its chip designs to more than 300 companies, including Apple and Samsung. Last year, 15 million chips based on its technology were shipped, up by almost 3 million from the year before. Cambridge-based ARM is expected to recommend shareholders accept the deal, which is a 43 percent premium on its market value of £16.8 billion.

    Sources say that one of Softbank’s primary motivations behind the deal is to help the company expand into what it sees as the next big thing in tech - the internet of things - an area where ARM is experiencing rapid growth.

    The ARM deal would be the latest in a long list of purchases by Softbank; the company acquired US network carrier Sprint Nextel for $20 billion in 2013, making it the biggest foreign investment by a Japanese firm at the time. Its other deals include purchasing the majority stake in Clash of Clans developer SuperCell, and the buyouts of Chinese taxi-hailing app Didi Chuxing and Indian internet retailer Snapdeal.

    The ARM buyout will likely be welcomed by the British government and new Prime Minister Theresa May; concerns were raised that the UK’s recent decision to leave the EU, which resulted in several tech firms raising the price of their products in the country, would put off international investors. It’s believed that Softbank will aim to double ARM’s UK workforce over the next five years.

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  2. I've always been against countries selling off their assets, but all the doom and gloom that was presented with regards to brexit already seems to be falling through.
    Is it possible that many countries out there actually see this as a positive narrative?
    wastedkill and Uncle Al like this.
  3. Theinsanegamer

    Theinsanegamer TS Evangelist Posts: 857   +873

    "Sources say that one of Softbank’s primary motivations behind the deal is to help the company expand into what it sees as the next big thing in tech - the internet of things - an area where ARM is experiencing rapid growth."

    So, they are already growing, why do they need help from softbank? ARM was not exactly hurting for cash. Why even sell your independence if you are a market leader?

    Based on how well sprint has done under softbank, that is to say outright lying about their coverage and abhorred customer service, I cannot say that this purchase is a positive thing.
  4. Uncle Al

    Uncle Al TS Evangelist Posts: 3,329   +1,976

    To quote the awe inspiring Mr. Vanbuilt ... "Always buy when there's blood in the streets" ....
  5. Evernessince

    Evernessince TS Evangelist Posts: 2,094   +1,270

    Wow, never thought I'd see ARM go so cheap, it still has plenty of potential to grow.
  6. Mithan

    Mithan TS Enthusiast Posts: 36   +29

    Its closer to 15 BILLION chips they ship a year, not 15 Million.
    wastedkill likes this.
  7. wastedkill

    wastedkill TS Evangelist Posts: 1,423   +350

    Would that mean AMD would get some cash or...?
  8. dividebyzero

    dividebyzero trainee n00b Posts: 4,891   +1,264

    ARM's revenue is solid and growing, but to maintain their product cadence they have had to rely more on purchasing IP than they have in the past ( Geomerics, Apical etc) to remain at the forefront of the business. Expenditure via IP acquisition tempers the overall financial position of the company.
    Details of the Softbank acquisition have apparently spelled out that ARM will still be run by the ARM Holdings executive. Softbank will remain the parent company, but ARM will continue to run as before- an autonomous division of the parent. Hopefully this remains the case. There are plenty of cases where a promise non-interference has fallen by the wayside - notably Exxon's purchase and subsequent destruction of Zilog.
    I don't see why not If ARM's headquarters allows busking, and the newly enriched shareholders take a liking to Lisa Su's rendition of "We Are the Champions" on the comb kazoo. :D
    wastedkill likes this.
  9. Jack007

    Jack007 TS Booster Posts: 181   +42

    Looks like someone grabbing this company to introduce other phones with arm cpus in them. In japan there are soo many gadgets just that they dont have the power of arm cpus. Now they will use arm cpus and try to sell the world all kinds of phones now
  10. Emexrulsier

    Emexrulsier TS Evangelist Posts: 574   +72

    They aren't selling off assets they are being bought out which simply means the main decisions will now be made by a new parent companies. The had offices and company name will all still remain in the UK. In a way this is very promising for brexit as it shows foreign countries still want to invest into the UK economy. And you never know with the new clout of Japan and their technological expertise this could send shares for arm through the roof furthermore attracting more and more custom to the UK import/export markets. It probably does mean though that arm had to reduce their selling costs as I am sure this deal all came together long before brexit.
  11. anticeon

    anticeon TS Rookie

    ARM is dead end ..... it will be replaced by Samsung chip ...

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