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Japan’s SoftBank is buying U.K.-based chip design firm ARM Holdings for about $23.4B EUR, according to the FT.
Why? Everything is a computer now, and ARM has been one of the winners of the mobile revolution.
ARM designs chips — but doesn’t actually make them — for a huge variety of devices. It dominates the market for smartphones — Apple is a big client, as is Samsung — and its chips shows up in other consumer gadgets, as well as more-industrial-like devices and “internet of things” sensors. The number of chips containing ARM processors reached almost 15 billion in 2015, up from about 6 billion in 2010....
Widely reported from multiple sources in the UK, subject to shareholder approval and assuming the new May government doesn't intervene. BBC is also reporting that Softbank has committed to doubling ARM's UK workforce over the next five years.
This price is nearly a 50% premium to Friday's close. One possibility here is a bidding war could ensue if someone else decides to drop more coin in front of ARM. Stay tuned, I get the feeling this isn't over just yet.
If anyone tries to make a move on ARM it'll kick off a bidding war. There are just so many companies who are strategically linked to ARM and have the balance sheet to make an over the top bid.
The Chinese are not going to let ARM fall into the hands of Japan.
Apple and Qualcomm are also possible white knights and they have to be watching this closely.
Intel could make a move as well, but there could be anti trust considerations.
TMSC or Samsung might also be a suiters.
In fact, [SoftBank CEO Masayoshi Son] said because ARM’s sales are mostly to customers in the U.S. and Asia, and are largely dollar-denominated, its stock has risen about 15 percent since the EU referendum vote. That means the deal actually became more expensive for SoftBank because of Brexit, not cheaper, he said.
The problem is that for the industry as a whole the best thing would be for ARM to remain independent and impartial with no risk of favoritism towards or competing with their own customers. But once somebody (e.g. Softbank) tries to buy them, everybody else (could be a long list) thinks they should grab them instead to prevent being at a disadvantage.
Agreed anything and everything British will be blamed on Brexit, regardless of facts.
That Son quote was from Bloomberg, and it is true for the ADR price (ARM shares traded on NASDAQ).
WSJ says if ARM were priced in yen, it's actually 15% cheaper now compared to a year ago.
Those are both short-term measures. I believe the price of 1700 pence was set to the ARM all-time high of 1205 pence in March 2015, and a forward-priced multiple of future earnings.
The problem is that for the industry as a whole the best thing would be for ARM to remain independent and impartial with no risk of favoritism towards or competing with their own customers. But once somebody (e.g. Softbank) tries to buy them, everybody else (could be a long list) thinks they should grab them instead to prevent being at a disadvantage.
Tricky - any bidder with anti-competitive (or presumed anticompetitive) goals would immediately drive down the value of the acquisition if they were successful. QCOM would be one example - Samsung and others would be very motivated to find an alternative solution. Not immediately certainly, but in time. Intel might be an exception, but could the get past NIH? Not clear. Best companies to make competitive bids would be others like Softbank - solution providers - who might be presumed to remain impartial to layers of chip providers below them.
Wow, the media is regurgitating all over this one. Here is my favorite quote thus far:
At the same time, the fact that ARM would no longer be a public company and likely stop reporting the same detailed financial results might give some customers pause.
“It is not going to be quite as transparent,” said Handel Jones, an analyst at International Business Strategies. “You’d be prudent to look at different options and Intel is one of them.”
Did Handel really say that Intel mobile is more transparent than ARM will be under SoftBank? Hahahahahahahahahaaaaa.....
I do not think UK will allow any foreign company to buy ARM (foreign is now also
EU). New Tory leader and Prime Minister May's main argument in becoming Tory
leader was that previous government leaders were not concerned enough about what is
good for the averge British citizen. I do not think there is any British high tech
company large enough to buy ARM.
I do not think UK will allow any foreign company to buy ARM (foreign is now also
EU). New Tory leader and Prime Minister May's main argument in becoming Tory
leader was that previous government leaders were not concerned enough about what is
good for the averge British citizen. I do not think there is any British high tech
company large enough to buy ARM.
There is a certain amount of due diligence that goes into acquisitions like this. The banks advising the deal would have carefully looked at any regulatory risk and would have to have concluded that the probability that the deal would be blocked by the UK government would be minimal. It's likely that negotiations have already been held with the UK government and ARMs promise to double employment in the UK was the result of that. Also the UK government has publicly welcomed that acquisition.
I think it's highly unlikely that the deal would be blocked by the UK.
