Japan's SoftBank has acquired ARM Holdings for $32 billion -- a major chip technology buyout that could impact the mobile, server, data center and Internet of Things (IoT) markets. It could also have major implications for microprocessor rival Intel Corp, while giving the United Kingdom a major vote of confidence amid the current Brexit controversy.
The ARM buyout price represents a 43 percent premium to ARM's closing price last week, marking the largest-ever purchase of a European technology company, SeekingAlpha reported.
SoftBank is a Japanese multinational telecommunications and Internet business that owns broadband, e-commerce, finance, media and marketing businesses. Acquiring ARM could create new synergies between SoftBank's telecom and Internet businesses, and ARM's chips -- which are designed for smartphones, car systems, laptops, servers and supercomputers.
Stuart Chambers, Chairman of ARM said:
“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. SoftBank has given assurances that it will invest considerably in the business, including doubling the UK headcount over the next five years and maintaining ARM's unique culture and business model. ARM is an outstanding company with an exceptional track record of growth. 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.”
That line about "wherever computing happens" could have major implications for Intel. The ARM vs Intel competition has been especially intense in the Android world, but competition could also intensify in the server and data center market, where ARM has been a fledgling player for several years.
Intel itself has been struggling to reposition for the mobile, cloud data center and IoT waves. The chip giant has had major layoffs this year and may also sell its McAfee security business in order to better focus on core growth opportunities.
SoftBank Acquires ARM: UK Brexit Boost
While some companies rethink hiring in the UK amid the Brexit controversy, SoftBank has clearly communicated that it will invest heavily in ARM's UK operations. According to SoftBank, the buyer intends to:
- preserve the ARM organization, including ARM’s existing senior management team, brand, partnership-based business model and culture to ensure continuity of a strong track record;
- maintain the headquarters of ARM in Cambridge;
- at least double the employee headcount in the UK over the next five years thereby enabling ARM to continue to develop leading-edge technology in the UK; and
- increase the headcount of ARM outside the UK over the next five years.
SoftBank Acquires ARM: Next Steps
The deal is not subject to any anti-trust or regulatory conditions, there are are certain terms and conditions that SoftBank must meet. ARM's board has already approved the deal, and shareholders will have their chance to weigh in on buyout soon.
