SoftBank to buy UK’s Arm for £24.3bn

Japan’s SoftBank has agreed to acquire Arm Holdings, the UK’s pre-eminent technology company, for £24.3bn in an enormous bet by the Japanese telecoms group that the smartphone chip designer will make it a leader in one of the next big tech markets, the internet of things.

The takeover of Cambridge-based Arm, which was founded 25 years ago and now employs 4,000 people, will be the largest acquisition of a European technology business. SoftBank will pay £17 in cash for each share in Arm, a 43 per cent premium to its closing price last week.

The deal announced, comes just weeks after the UK elected to exit the EU, a decision that raised questions over the attractiveness of the country’s business community. But Arm, as a global force in chip design, is better insulated from the vote for Brexit than many other UK companies by its leadership role in a key segment of the chip industry and the fact that it earns in US dollars.

The fall in sterling following the Brexit vote has left the UK currency nearly 30 per cent lower against the Japanese yen over the past year, making Arm an attractive target. Shares in Arm were essentially flat over the past 12 months.

Philip Hammond, the UK’s new Chancellor of the Exchequer, said Softbank’s investment would be the largest ever from Asia into the UK. The deal would “guarantee to double the number of jobs in Arm in the UK over the next five years and turn this great British company into a global phenomenon”.
“Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors.”

After taking into account £1bn of cash held by Arm, the deal gives an enterprise value for the business of around £23.3bn. This is 24.4 times Arm’s 2015 revenues of £968.3m and approximately 56.8 times adjusted profit after tax of £428.9m.

Only weeks ago, Masayoshi Son, the charismatic 58-year-old chairman…

Read more at: