Softbank to acquire ARM Holdings in $32bn deal

September 2016 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

The Japanese multinational telecommunications and internet firm SoftBank Group Corp is to acquire ARM Holdings plc, the UK-based designer of computer chips for tablets and smartphones, in a deal worth in the region of £32bn.

Under the terms of the all-cash transaction, SoftBank will acquire 1412 million shares of ARM with each ARM shareholder receiving 1700 pence in cash for each ARM share. In addition, ARM shareholders will also be entitled to an interim dividend of 3.78 pence per ARM share, which will be paid on 10 October 2016.

“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.

“This investment also marks our strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent in Cambridge. 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.

“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.”

SoftBank believes that both it and ARM share the same technology-oriented culture, long-term vision, focus on innovation and commitment to attracting, developing and retaining top talent. Furthermore, SoftBank is of the opinion that these common values will be the foundation for the strong strategic partnership necessary to capture the significant opportunities ahead.

“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,” said Stuart Chambers, chairman of ARM. “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, as well as maintaining ARM’s unique culture and business model.”

Headquartered in Cambridge, England, ARM, according to its website, “designs the technology that lies at the heart of advanced digital products, from wireless, networking and consumer entertainment solutions to imaging, automotive, security and storage devices”.

Mr Chambers continued: “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.”

The acquisition, which has been approved by Softbank’s board of directors, is also subject to the approval of ARM’s shareholders. ARM’s board of directors has unanimously confirmed that it intends to recommend the acquisition to ARM’s shareholders.

The Raine Group, Robey Warshaw LLP and Mizuho Securities Co., Ltd. are acting as financial advisers to SoftBank during the transaction, while BG, Morrison & Foerster LLP and Freshfields Bruckhaus Deringer LLP are being retained as legal advisers.

SoftBank and ARM expect the closing of the deal to occur as soon as practicable in the third quarter 2016. As a result of the acquisition, ARM will become a wholly-owned subsidiary of SoftBank.

Mr Son concluded: “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.”

Fraser Tennant