Sprint's owner SoftBank swoops in to buy ARM in $32 billion mega deal



ARM Holdings, the British architecture designers of all things chip and mobile, has seen its shares outperform Apple's in the past year, riding on the hope that is the Internet of Things (IoT) phenomenon, which is supposed to bring every item there is around the house - from sneakers to fridges - online. ARM needs no introduction, as most every mobile chipset out there, including Apple's own A-line, and Samsung's Exynos, not to mention the Snapdragon family, are based on its generational designs.

These are exactly the reasons that SoftBank, the Japanese parent company of Sprint, is taking advantage of the pound sterling crash after the Brexit vote, and has rushed to offer $32 billion for ARM, in one of the largest tech deals ever. It's not clear yet if the new UK government led by Theresa May will give a nod to the deal, as the prime minister already warned against UK company takeovers that will be inevitable as the pound drops, but if it does, it would be a pretty surprising move for the mobile industry.

If and how this will affect the ARM chip designs that go into our mobile phones and tabelts, remains to be seen, but for now the deal seems like a perfect fit for Softbank, at least. ARM has been stagnating a bit lately, as the smartphone industry matures, but its IoT potential is deemed worthy of the whopping 43% premium in share price that SoftBank is willing to pay for it. After all, the company has a pretty low overhead, and vast amounts of cash are pouring in mainly from licenses and royalties on its intellectual property over mobile chip designs architecture - ARM made $1.5 billion of revenue last year, and works on a fat 50% operating margin, too.

source: WSJ (paywall)

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23 Comments

1. trojan_horse

Posts: 5868; Member since: May 06, 2016

My signed petition: ARM should not be sold! The UK gorvement won't allow it, anyways.

2. legiloca

Posts: 1676; Member since: Nov 11, 2014

*government :)

7. trojan_horse

Posts: 5868; Member since: May 06, 2016

Thanks for the spelling correction, @legiloca English isn't my native language, though.

19. legiloca

Posts: 1676; Member since: Nov 11, 2014

Am not perfect either, just tryna' help :D

3. kiko007

Posts: 7493; Member since: Feb 17, 2016

May I ask why you don't want to see ARM sold? Just curious is all :D.

9. trojan_horse

Posts: 5868; Member since: May 06, 2016

*Not sold to an Asian company. ARM's quality will downgrade in the hands of Softbank, like what happened to Aldebaran Robotics when Softbank bought it. http://www.rudebaguette.com/2014/12/15/aldebarans-trouble/

10. vincelongman

Posts: 5677; Member since: Feb 10, 2013

Please dont spread racism here BTW here's ARM and SoftBank's press releasehttps://www.acceleratingtech.com/ Supposedly: *Assurance to double ARM’s UK headcount in the next five years and increase headcount outside the UK *Leave ARM’s successful partnership business model, culture and brand unchange Hopefully they stay true to their words Otherwise the mobile world will be in for a shock

12. trojan_horse

Posts: 5868; Member since: May 06, 2016

What racism did I say? I simply said why I do not want an Asian company to take over ARM. I dislike their business entrepreneurship. What you quoted off from the ARM-Softbank alleged deal, that's what Softbank promised to Aldebaran Robotics, but look at what happened later: the company became disorganised, employees lost jobs. Let me quote an employee's comment after Softbank's acquisition: “If we were paranoid, we’d say that FoxConn stole the hardware, Softbank stole the software, and Aldebaran Robotics was sucked dry.”

21. vincelongman

Posts: 5677; Member since: Feb 10, 2013

"I simply said why I do not want an Asian company to take over ARM. I dislike their business entrepreneurship." That is racism Not all Asian companies have the same business entrepreneurship Maybe be SoftBank are one of those ones But it remains to be seen what they will do with ARM

11. surethom

Posts: 1665; Member since: Mar 04, 2009

Sad news, another great Big British company selling out, less money for the UK government as profits will do abroad.

4. Kumar123 unregistered

This story will make a certain South Korean ( who is actually not a South Korean) Patriot extremely butthurt.

5. losersmurf29

Posts: 24; Member since: Mar 15, 2015

Yeah, Hallyu.

6. ebilcake

Posts: 1227; Member since: Jul 16, 2016

This should be blocked.

14. lpratas

Posts: 398; Member since: Nov 09, 2011

I also think so.

8. Boybawang

Posts: 205; Member since: Jun 02, 2013

This will make the future ARM processors more expensive to compensate for the high acquisition cost IMO

13. lpratas

Posts: 398; Member since: Nov 09, 2011

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15. lpratas

Posts: 398; Member since: Nov 09, 2011

Another western company object of the greed of chinese companies.

17. deezwhut

Posts: 7; Member since: Jun 21, 2016

Softbank is Japanese

18. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Sae difference. Its obvious he is trying to say, another Western brand is bring taken over by an Asian company. Who or where do most electronics and their parts come from? ASIA! The US has the knowledge an capability to make their own chips. But they rather go overseas and less them do it for us. Millions of jobs we could have her making our country better, goes overseas so corps can make masses amounts of money, but don't even want to pay employees a reasonable livable salary. Let them take over. It doesn't matter anyways. The vast majority of our tech comes from them anyways. Let them have all of it. What gonna happen eventually, they are going to have 90% of the country using their stuff and then they are going to one day shut us down and make us defenseless and they are going to come and literally take us over.

20. lpratas

Posts: 398; Member since: Nov 09, 2011

Possibly with the Japanese, Arm would have sucess, not with chinese hungry and greed companies for buying western companies.

16. jove39

Posts: 2145; Member since: Oct 18, 2011

After investment of $32 billion...what does softbank gains? ARM's last year revenue is $1.5 billion only.

22. vincelongman

Posts: 5677; Member since: Feb 10, 2013

That's worrying I hope they dont cut costs and raise licensing prices

23. lpratas

Posts: 398; Member since: Nov 09, 2011

It's better than in chinese hands, there in chinese hands it is not the solution, because they don't know to keep a company a their products stable and organizated and possibly would begin to interfere in the developement of the Arm chipsets and Arm GPU's. And their objective it is to spy the technologies of Arm and acquire knowledge for develop their own products.

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