SoftBank to Buy ARM Holdings for More Than $32 Billion
Both companies’ boards have agreed to the deal
Rick Carew in Hong Kong and
Ian Walker in London
Updated July 18, 2016 7:25 a.m. ET
HONG KONG—U.K.-based chip designer ARM Holdings PLC confirmed Monday that it agreed to a buyout offer worth more than $32 billion from SoftBank Group Corp. , marking a significant push for the Japanese telecommunications giant into the mobile internet.
The all-cash deal comes on the heels of SoftBank Chief Executive Masayoshi Son’s decision to take back the reins of the company’s investment strategy from his former deputy and designated successor, Nikesh Arora, who resigned in June.
“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,’” Mr. 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 said. ARM’s shares rose as much as 45% in Monday morning trading in London.
The Japanese company said it would double employee head count in the region over the next five years. It also plans to increase head count outside the U.K.
The ARM deal also comes less than a month after the U.K.’s decision to exit the European Union, a move that pushed down the value of the pound. That has made British companies potentially more attractive for buyers from overseas. But it also comes after a rally in ARM shares after the June 23 vote. ARM has very little sales in Britain itself.
In a press conference Monday in London, Mr. Son said he wasn’t affected by Brexit considerations and had only met ARM’s chairman for the first time two weeks ago—and after the Brexit vote.
Brexit “didn’t affect my decision” on pursuing ARM, he said. He said the recent drop in the pound after Britain’s referendum last month “did not bring us any discount.”
Philip Hammond, Britain’s Treasury chief, said early Monday he welcomed the deal in a statement. Mr. Son said he told Mr. Hammond that he would keep ARM based in England. About 1,600 of ARM’s 4,000-employee force is based in the U.K. Mr. Son said he pledged to British officials that he would double ARM’s U.K.-based workforce over the next five years.
Cambridge, U.K.-based ARM, whose microchip designs dominate the global processor market for smartphones including Apple Inc. ’s iPhone, boasts a strong portfolio of intellectual property for chips connecting mobile devices. While less vibrant demand for smartphones has weighed on ARM’s recent results, SoftBank is betting that its technology will be crucial to connecting devices ranging from smartphones to automobiles and appliances, according to a person familiar with the matter.
SoftBank also controls Sprint Corp. and has been cutting expenses to revive the No. 4 U.S. mobile carrier.