Japanese telecommunications investment company Softbank Group is acquiring British microchip design firm ARM Holdings for about $32.2 billion in a deal that aims to expand ARM's push into the Internet of things around the world.
Under the agreement, announced July 18, Softbank will pay about $22.70 per share for ARM stock, which is a 43 percent premium on the stock's closing price on July 15, according to the companies. The boards of both companies said they have reached an agreement for the all-cash transaction, which does not require antitrust or regulatory approvals.
Softbank also said that ARM's business will continue with its existing executive management team and brand, and will remain an independent business based at its Cambridge, England, headquarters as the acquisition moves forward. Softbank also plans to expand ARM's workforce in Cambridge and outside the United Kingdom over the next five years.
The terms of the acquisition offer will be put before ARM shareholders who must approve it by at least a 75 percent majority.
"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," Masayoshi Son, chairman and CEO of Softbank, said in a statement. "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."
The purchase of ARM "also marks our strong commitment to the United Kingdom and the competitive advantage provided by the deep pool of science and technology talent in Cambridge," said Son. "As an integral part of the transaction, we intend to at least double the number of employees employed by ARM in the UK over the next five years," while also investing in ARM, supporting its management team, accelerating its strategy and allowing it to "fully realize its potential beyond what is possible as a publicly listed company."
ARM Chairman Stuart Chambers said in a statement that his company accepted Softbank's "compelling offer" with assurances "that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology."
Softbank's expansion plans for ARM also played into the company's decision to accept the offer, said Chambers. "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 has become the dominant player in the mobile device market, particularly in smartphones and tablets. The company designs systems-on-a-chip (SoCs), and then licenses those designs to such vendors as Samsung, Qualcomm and Nvidia. Like most others in the processor space, ARM officials are seeing the slowdown in shipments as the global smartphone market matures and tablet sales decline, and they are looking for new growth areas, according to a recent eWEEK story. Emerging markets such as connected cars, industrial applications, robotics and the IoT will be important to ARM and others.
In May, ARM acquired Apical, a small British company that develops embedded computer vision products, for $350 million as part of its plan to grow its business. ARM said the deal would expand its ambitions in such areas as connected cars, robotics and the IoT. Apical's technology enables systems to interpret their surroundings based on images and act accordingly based on that information, an important capability not only for self-driving cars but also for other environments, including smart buildings, security systems, retail applications, robotics and mobile devices.
In June, Fujitsu announced that it will ditch SPARC chips for the ARM architecture for the next generation of the K supercomputer that currently is the fifth-fastest system in the world, according to a recent eWEEK story. The choice to swing to the ARM architecture was based on a broad array of factors, including the need to keep power consumption and costs down while still driving the performance needed for the massive system. ARM's low-power architecture can be found in most smartphones and tablets on the market today, and the company and its chip-making partners for the past several years have been pushing to develop SoCs for data center systems, including servers, storage appliances and networking gear.