SoftBank Group Corp. (SBG) of Japan has reached an agreement with ARM Holdings plc of the U.K. to acquire the microprocessor intellectual property developer in an all-cash transaction worth approximately £24.0 billion ($31.4 billion). SBG will use a combination of $21.5 billion of cash on hand plus a loan of $9.5 billion to cinch the deal, which would see ARM become a wholly owned subsidiary of SBG.
The proposed price per share of £17 represents a premium of approximately 43% to the closing price of £11.89 per ARM share, and approximately 42.9% to the closing price per ARM ADR of $47.08, on July 15, 2016.
The SBG board of directors has approved the deal, which now awaits the approval of ARM's shareholders and the English court. ARM's board has unanimously confirmed that it intends to recommend the acquisition to the company's shareholders. If all goes according to expectations, the acquisition should close in the third calendar quarter of this year.
SBG operates several communications-related businesses in Japan, including a mobile services provider and Yahoo Japan. It also owns U.S. mobile services provider Sprint and sells online games. Other activities include ownership of the Fukuoka SoftBank Hawks of the Nippon Baseball League.
ARM's IP has found its way into a wide variety of applications, including servers, networking platforms, embedded computers, wearables, and Internet of Things.
"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 Masayoshi Son, chairman and CEO of SBG.
"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," Son added. "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."
"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," confirmed Stuart Chambers, Chairman of ARM. "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."
ARM reported revenues of $398 million in the first quarter of 2016, up 14% year on year. For fiscal year 2015, the company reported revenues just shy of $1.5 billion, up 15% versus 2014. That led to pre-tax profit of almost $680 million, the company said.
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