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The darling of the UK tech industry, Arm Holdings, is to be sold to Japanese telecoms group Softbank for £24.3bn.
Softbank is betting the house that the acquisition will make it a world leader when it comes to the internet of things.
SoftBank will pay £17 in cash for each share in Arm, representing a 43% premium on the company’s closing price last week.
“SoftBank has had a successful history of investing and acquiring to build the SoftBank conglomerate, including its robotics division and lucrative position as Japan’s third largest mobile network operator,” commented Frost & Sullivan’s Vijay Michalik. “Its interest in ARM Holdings is indicative of a continued focus on the Internet of Things, a paradigm which sees all objects connected and granted new capabilities.”
“SoftBank wants ARM Holdings for a high-volume stake in the next wave of IoT devices, from home appliances to the Connected Car. Processing power is getting moved closer to the edge through advanced applications in Automotive, Healthcare and Augmented Reality with low latency requirements, which increases ARM Holdings’ potential. In recent years, SoftBank has also built capabilities in Artificial Intelligence, which will help create new and powerful synergies following today’s acquisition,” Michalik added
Philip Hammond, the new chancellor of the exchequer, said the acquisition was the largest ever Asia-UK deal.
The Cambridge-based chip designer was founded 25 years ago and despite its humble beginnings, now wields some staggering statistics. Its chip architecture is found in 99% of the world’s smartphones and tablets. Nearly 4.3bn people touch an ARM-based device every single day. The fabless company’s intellectual property can be every iPhone and iPad, and most Android devices.
There had been speculation that Intel, Apple and Samsung were all ideal candidates for an acquisition.
Those concerned that Britain’s pride and joy will be lost entirely to Japan needn’t worry. According to SoftBank, the firm intends to keep Arm headquarted in Cambridge and has vowed to create at least 1,500 new jobs in the UK over the next five years, as well as increase hiring overseas.
Despite the promises, the news remains a bitter pill for fans of the British tech market.
“When everyone said ‘So where is the UK’s Google, Facebook or Apple?’ we could all say ‘But we have Arm!’” commented Richard Holway of TechMarketView.
“I won’t be able to say that anymore. I have often said that I believed that Arm was the best tech company the UK had ever produced. Arm was the only company in the FTSE100 Hardware & Equipment Sector.”
“In my now long 50+ years in the UK tech industry, almost every news story I have reported has been of a UK tech/SITS leader ‘falling’ to a foreign predator. To the point where there are only two such companies left in the FTSE100 – Sage and ARM. Now looks like Sage is the only one standing,” he added.