Chip designer ARM to be bought by SoftBank for $32bn

Posted on 19 Jul 2016 by Michael Cruickshank

UK-based computer chip designer ARM has announced that it will be bought out by Japanese telecommunications company SoftBank.

The deal, will reportedly be worth a massive $32bn, a figure all-but unprecedented in the industry.

Representing the largest ever acquisition of a European tech company, ARM’s board is recommending shareholders accept the buyout offer which is at a roughly 43% premium when compared to their current market cap.

Nonetheless, ARM will still need the approval of 75% of its shareholders before the sale goes ahead. As well, despite warning about the dangers of foreign takeovers, new British PM May has signalled that she believes the deal is ‘in the national interest’.

Unlike other semiconductor chip companies, ARM specializes in designing small-scale systems made for mobile devices.

ARM’s business module itself relies on the company licensing its designs to hardware manufacturers such as Samsung and HTC.

These days many of the world’s leading smartphones, including the Apple iPhone
and Samsung Galaxy make use of powerful, yet small ARM-designed chips.

The company’s chips are seen as well-placed for use in the so-called Internet of Things (IoT), something which SoftBank said factored into their decision to make a buyout offer.

“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,” said Masayoshi Son, chairman and CEO of SoftBank.

“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.”

‘Sad day’ for Britain

While the company will no longer have local owners, ARM plans to maintain its base of operations in the UK, and indeed double its workforce into the future.

Nonetheless, some within the tech industry in the UK have mourned the loss of independence for the soon-to-be Japanese company.

“ARM has been the proudest achievement in my life and so it’s a very sad day for me personally and for technology in Britain,” said ARM founder Hermann Hauser in an interview with ITV.