$32B SoftBank acquistion of ARM may disrupt IoT and server markets

SoftBank Group Corp. announced that it has completed its acquisition of ARM Holdings Plc, the microprocessing designer, for £24 billion in cash–or about $32 billion in today’s exchange rate. The Japanese Internet and telecommunications company SoftBank’s intent to acquire ARM was first made public back in July, and according to SoftBank, it has received its final regulatory clearance in the last few days and the two companies were quick to finalize the transaction.

ARM is an appealing target for SoftBank, as ARM microprocessors power more than 95% of the world’s smartphones. It’s such an appealing option for them that it’s by far their largest investment to date.

“Pursuant to the terms of the Acquisition, SBG purchased all of ARM’s issued and to be issued shares (excluding any ARM shares already owned by SBG or an SBG subsidiary) for cash, for a total acquisition price amounting to approximately GBP 24.0 billion (approximately USD 31.0 billion or JPY 3.3 trillion),” the company stated in its announcement. “Subsequent to the completion of the Acquisition, ARM will be delisted from the London Stock Exchange as of September 6, 2016 (GMT) and will cease to be a listed company.”

Brexit not a factor

Some are questioning the acquisition as it came after Brexit stating that the deal was a bad deal, but Masayoshi Son, Softbank’s CEO and founder, sees things differently.

“Brexit did not affect my decision,” Masayoshi Son said in a press conference the day the deal was announced. “Many people are worried about Brexit and concerned about he complex situation of the country, but good or bad … I did not make the investment because of Brexit.”

SoftBank’s acquisition of ARM is said be tied to the company’s Internet of Things (IoT) strategy. ARM has placed itself in the center of IoT and mobile as its chip designs have been licensed to companies such as Apple, Samsung, and Qualcomm who create the chips and embed it in their products. Such chips have made it easy to create connected devices that can be controlled using a web portal or an app on a person’s smartphone or tablet. Another interesting element to consider is the future of ARM within the server markets around the world. At this level of acquisition price, SoftBank will surely be interested on creating opportunities for return that could have far-reaching implications.

Image source: Pixabay

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