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

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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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