SoftBank snaps up ARM in £24 billion deal

Japanese telecoms provider SoftBank has agreed to purchase chip design and IP firm ARM Holdings for £24 billion ($31.8 billion) in cash, or £17 ($22.52) per share. That value represents a 43% premium on ARM's last closing share price. The deal will be subject to approval by ARM's shareholders and UK regulators. ARM's board of directors has "unanimously confirmed" that it will advise shareholders to approve the buyout.

SoftBank says "ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the 'Internet of Things.'" SoftBank intends to "at least double" the number of employees (about 1,600, according to ARM's announcement video) at ARM's Cambridge headquarters, and it'll also push to increase the number of ARM employees globally. ARM's management and business model will remain unchanged.

ARM provides CPU, GPU, and other microprocessor IP used in a vast swath of mobile and embedded SoCs, as well as server chips. The company had recently announced its next-generation Cortex-A73 CPU core and Mali-T880 GPU at Computex.

Comments closed
    • ronch
    • 4 years ago

    Unless SoftBank totally knows how to run ARM, does anyone here think this could open up opportunities for other ISAs?

      • Sam125
      • 4 years ago

      Possibly, depends on how SoftBank manages ARM and how much more money they want from a license.

        • nanoflower
        • 4 years ago

        Their statements have said that they intend to leave ARM alone (other than perhaps putting money into the company to allow for expansion.) If so then nothing may change as far as ARM customers are concerned.

    • Unknown-Error
    • 4 years ago

    So what are the implications for ARM license holders? Apple, Qualcomm, Samsung, etc

    And what effect on the consumer?

    Edit:

    Softbank owns Sprint Communications?

      • ronch
      • 4 years ago

      I think SoftBank will obviously want to make a tidy profit but if they raise prices too much it could open opportunities for MIPS and others. Personally I would love to see open ISAs like RISC-V take off big time, but that’s practically almost impossible.

    • ronch
    • 4 years ago

    Hmm.. Being a telecom company and snatching up an ISA that’s most prevalent in mobile phones and other things that connect to mobile networks, I shiver at the thought of the crazy possibilities open to SoftBank now.

    • tipoo
    • 4 years ago

    lol
    “July 11: Theresa May says govt will block takeovers of key UK firms
    July 18: Govt welcomes takeover of Arm, UK’s most important tech company”

    [url<]https://twitter.com/JonathanEley/status/754952768159440896[/url<]

      • nanoflower
      • 4 years ago

      So now we know ARM isn’t a key UK firm.

      • Sam125
      • 4 years ago

      What a hilariously stupid government. LoL!

      • Sam125
      • 4 years ago

      Allow me to clarify since I was laughing so hard at this when I was first reading. What a stupid government decision to sell your most valuable tech firm to a foreign company that is kind of a nationalized company in Japan.

        • bronek
        • 4 years ago

        The UK government does not have much to say and indeed is not selling ARM, because it does not own it. This company is publicly traded, and is not deemed (as nanoflower correctly devised) to be strategically important. Such title would be normally reserved for companies running country’s infrastructure, not for a tech company popular in the whole world.

          • Sam125
          • 4 years ago

          Except that’s not true. Much like how the DOJ prevented Intel from selling their CPU solutions to the Chinese market, giving AMD sole access to China for x86, the UK’s equivalent to the DOJ can block mergers and buy outs. Heck, the Queen could come out and say losing ARM as a British company is bad for the UK might be enough to sway stock holders to vote against the buy out. When it comes to what is still a kingdom, there are forces at play that can stop any deal dead in it’s tracks.

            • Sam125
            • 4 years ago

            Well, I guess getting the Queen /jolly old England/ involved would depend on who the majority of the stock owners are since Arm is on the NASDAQ.

            Edited in the words between the / /.

            • bronek
            • 4 years ago

            Duh, ignorance raises its head again. NASDAQ:ARMH is an ADR, that is derivative instrument (more specifically, a depository receipt) to LSE:ARM which is primary market for ARM.

            • Sam125
            • 4 years ago

            *sigh* I don’t want your autism. Go somewhere else to spread your autism, fool.

            • bronek
            • 4 years ago

            Congratulations on your knowledge of British system of government, I guess gleaned from American show The Royals ?

      • Sam125
      • 4 years ago

      Yep, still funny. LoL

    • Sam125
    • 4 years ago

    LoL well there’s still MIPS if anyone is truly disappointed by this news. LoL #Brexit

      • Sam125
      • 4 years ago

      Not to mention AMD themselves who are still based in the US. 😉

        • ronch
        • 4 years ago

        I think given how x86 is still one of the only two really dominant ISAs in the world (and used in REAL computers at that), and given AMD’s unique position of being the ONLY x86 licensee able to produce x86 chips in significant volume, and given AMD’s formidable technical prowess, and given how much their share price has sunk until recently, one would think many folks would be interested in buying them. But no.

        I think, given these facts, it’s safe to assume the x86 license does not transfer.

          • Sam125
          • 4 years ago

          AMD also has an pre-existing ARM license and has the design talent to create non-trivial designs with ARM chips. However, considering that x86 has been proven to be able to fit into the mobile space, I wouldn’t be surprised if Intel followed by AMD took a dominant position in the mobile market and especially here in the US.

            • ronch
            • 4 years ago

            Don’t you know Intel already quit the battle in mobile?

            • Sam125
            • 4 years ago

            Intel quit in mobile? Well that’s too bad, then AMD with their ARM license and even converting to MIPS or some other coding language can easily make a market for themselves in mobile. Assuming that they even want to though. I guess we’ll have to wait and see what Apple’s response is to their A-cores.

            • ronch
            • 4 years ago

            If AMD wanted to enter the mobile market they should’ve done so many years ago, not now.

            • Sam125
            • 4 years ago

            Pfft, Intel can enter the mobile market whenever they want to. The company simply isn’t extremely greedy and neither are their shareholders.

            • Pettytheft
            • 4 years ago

            Perhaps the all time blunder of AMD is selling off it’s handset division to Qualcomm. AMD has tanked and Qualcomm has continued to rise. Had they held on a bit longer they probably could gave got billions verses the 70million or so they received.

            • ronch
            • 4 years ago

            That was a blunder I’m sure they won’t soon forget.

            • Sam125
            • 4 years ago

            Low margin low end CPUs aren’t something Intel, AMD, National Semi, etc want to do. Selling off their mobile division to Qualcomm wasn’t a mistake. Look at the dire straights Qualcomm is in now that Arm is being sold to SoftBank, they are literally at the mercy to a foreign company who might not always be friendly to their needs.

            Bad move by ARM by even allowing stockholders to have a voice.

          • Sam125
          • 4 years ago

          It’s not that there are no buyers of AMD, Lisa Su is committed to keeping AMD an ongoing entity completely independent from outside forces. Plus they have the luxury of the Chinese market to themselves and is spreading x86 there as well. Plus their APUs and CPUs are selling like hotcakes over in China.

          Once AMD has Zen out in the market, which is looking to be Q4 this year AMD will finally be able to move back into the mainstream and perhaps even the high end market once again. That’s why there are no buyers of AMD, they’re poised to rocket to success. If I had some spare cash right now, I’d buy shares in AMD during a recent low. Because 2017 is going to see their share price go up. Maybe not meteorically but it will rise. Then you can keep the unrealized gains and sell when you please or hold on to the shares.

      • Sam125
      • 4 years ago

      Also, why is code all still binary when trinary transistors are looking to be the next big thing in silicon? : )

    • w76
    • 4 years ago

    No comments on doubling the headcount? That was the most important part of the article for me, that doesn’t generally happen unless one thinks there’s a bright future, or plan on creating a bright future. Also, great news for Cambridge in particular.

    • ronch
    • 4 years ago

    Shocking, but at least it’s not some Chinese firm that snapped ARM up.

    • tipoo
    • 4 years ago

    If Softbank tries to push margins up, possible market force balancer?

    [url<]http://www.anandtech.com/show/10488/sifive-unveils-freedom-platforms-for-riscvbased-semicustom-chips[/url<]

    • Tristan
    • 4 years ago

    After buying, let they raise 10x license costs. Apple, Samsung and other greedy corp will have to pay.

      • tipoo
      • 4 years ago

      If the 20 dollar chip powering smartphones went up to 200 dollars, the market would simply see tanked sales.

        • blastdoor
        • 4 years ago

        Nah, Apple would switch to PowerPC.

          • Terra_Nocuus
          • 4 years ago

          and then to Intel

            • the
            • 4 years ago

            And then to 68K to go full circle.

          • tipoo
          • 4 years ago

          Seems somewhere between x86 and ARM for mobile suitability with the ISA size. I’d rather Apple pursue a custom ISA like they’ve been doing for so many other areas. APFS, custom cores, custom NAND controllers, now they’d own the whole ISA as well.

            • blastdoor
            • 4 years ago

            Good point — they could do that, too.

            Either way, though, they would definitely have options. And I imagine their contracts with ARM give them the flexibility to make any needed transition without much of a disruption. It might cost a billion dollars or more, but that’s do-able for them.

            But because they could do it, I doubt that they will need to do it. The credible threat should be sufficient.

            • the
            • 4 years ago

            The core team of designers at Apple do have a history of working across multiple architectures: they were key designers of several DEC Alpha and PA-Semi’s PowerPC chips. In fact, Apple’s recent cores bear a high level resemblance to the DEC Alpha (low level of course is very different).

            A custom ISA for Apple is totally doable but I’m not entirely sure Apple want to go that direction. One of the major benefits of using a common ISA is to leverage existing development tools. Apple going their own direction would require them to write their own compilers or open up some of the details of their architecture for inclusion with open source tools like gcc.

        • the
        • 4 years ago

        Yes and no. Existing contracts in place would still be honored with the sale. New contract on the other hand would affect designs tat would reach consumers several years down the road. A change in licensing would have an immediate impact with developers (Apple, Google mainly) starting a platform change. The timelines would be tight but possible for those agile companies to have migrated to a new platform before chip prices were impacted. The real question in such a scenario is what alternative platform would they go to?

        • smilingcrow
        • 4 years ago

        The licensing cost is a relatively small part of a $20 chip so your maths are way off.

      • chµck
      • 4 years ago

      Unlikely.
      Softbank probably just bought ARM because they see that they are a growing revenue machine ($1.2B in revenue 2015). Seems like a good investment that will pay off in a short time.

        • blastdoor
        • 4 years ago

        bingo

        • Tristan
        • 4 years ago

        They have some 500mln£ profits per year, won’t pay off in short time

          • cygnus1
          • 4 years ago

          Pay for itself and pay off aren’t the same thing

      • jihadjoe
      • 4 years ago

      And pave the way for the rise of x86 in mobile.

      • ronch
      • 4 years ago

      That will just open the door of opportunity to MIPS and others.

    • maxxcool
    • 4 years ago

    Hmmm I’m not fully convinced a greedy tech group is “Going to keep the same happy meat and potatoes” licensing model.

      • blastdoor
      • 4 years ago

      Do you think the shareholders who sold ARM to SoftBank were running ARM as a charity?

        • maxxcool
        • 4 years ago

        Hardly of course, However Arm twisting for license fees was not a top strategy. I fear it will now be so.

          • tipoo
          • 4 years ago

          Hard to say. The licencing structure is exactly why ARM is so prevalent now, but now that they’re huge, they also don’t have other architectures seriously challenging them on mobile. Intel up and gave up, MIPS is just kind of there, AMD never showed up. I’d like to say market forces would keep it in check, but there’s effectively no game in town right now but them.

            • maxxcool
            • 4 years ago

            Precisely why I fear a Mini-Intel will come about :/ ..

            • blastdoor
            • 4 years ago

            Everything tipoo says is true, but it was true before SoftBank bought ARM, too. ARM is a profit-maximizing company whose business model is licensing its IP far and wide. Of course it will try to get the highest price it can, but that’s true regardless of whether SoftBank owns them or the mishmash of people who previously owned them.

            I agree that the exit of Intel from the mobile space means that ARM currently faces little direct competition in that space. However, there are a lot of credible competitive threats that will keep ARM from getting out of hand.

            1. Intel could always choose to re-enter the market
            2. AMD, with financial support from, say, Samsung, could enter this market
            3. Apple isn’t shy about switching ISAs, and with total control of the stack and a mountain of cash, they could pull it off with minimal disruption to customers or developers.
            4. The Chinese could switch to MIPs.

            • tipoo
            • 4 years ago

            Apple in particular has put so much into custom cores, and since they’re vertically integrated and don’t need wide ranging compatibility, I wonder if they could up and make their own ISA…

            • maxxcool
            • 4 years ago

            I’m not convinced.

            Intel won’t re-enter, it is too costly and they learned their lesson that you ‘cannot buy’ a market.

            Samsung would sooner buy AMD for the graphics and compute stack than back it. AMD is not a horse to bet on but has good tech that could be used.

            Apple and Mips .. not sure on that. Apple could afford to buy ARM a decade ago but has not, I think their happier being a client than a landlord. As for Mips it is cheaper, so I am not sure why the Mips loving Eastern markets are not rife with uber-cheap handsets… All i can guess there is contact deals to keep Mips in its place.

            • tipoo
            • 4 years ago

            Apple had a stake in ARM as well iirc, I wonder how this buyout impacts that? Still the same share?

            • ronch
            • 4 years ago

            I think if ARM becomes too greedy and Apple ditches them, there’s always MIPS that Apple can snag for a few coins. How hard would it be for them to buy MIPS and work on it?

    • chuckula
    • 4 years ago

    Well that escalated quickly.

    Anybody ever heard of SoftBank?

      • tipoo
      • 4 years ago

      Yeah, they’re a fairly big telecoms company, they bought and sold Supercell among others.

        • blastdoor
        • 4 years ago

        They also own Sprint and they are the main cellular carrier in Japan.

          • chuckula
          • 4 years ago

          That raises some interesting potential issues between ARM’s new ownership and some of ARM’s customers.

            • blastdoor
            • 4 years ago

            I actually think this matters very little to ARM’s customers, except as I’ve noted in other posts, perhaps it might ease any lingering fears about ARM being bought by a competitor. For example, I’m sure Apple is much happier to have ARM owned by SoftBank than by Samsung.

      • Sam125
      • 4 years ago

      Yes, Softbank is a mobile carrier that is partially nationalized by the Japanese government so they are essentially bankruptcy proof within their own country. I can see the Chinese completely abandoning Arm in favor of their own custom semis or take the plunge and embrace x86 across the board. As for the Koreans, they’ll likely limit phones with Arm to sales in the UK and Japan and go with an independent ISA altogether. Since we all know the gouging is going to begin. Rough seas ahead, indeed.

      • Sam125
      • 4 years ago

      What I’m very curious about is what Qualcomm will do. They are 100% reliant on Arm.

    • tipoo
    • 4 years ago

    I’m applying cautious optimism here, potentially a good way for ARM to get the funds to compete in the larger silicon die spaces, i.e bolster their server push with larger higher IPC chips, though on the other hand I hope it’s not a case of a big company buying another one and messing up the whole management structure, then selling them off a shell of what they used to be.

    ARM was managed very well on their own, I hope they retain management control.

    £24 billion for ARM, AMD would be peanuts for some synergy…

      • blastdoor
      • 4 years ago

      I doubt they’ll touch the management one iota, but I also doubt that this will make more capital available to ARM. I think this is akin to being bought by a giant mutual fund (hence my analogy to Berkshire-Hathaway in my other post).

      This really just guarantees ARM’s independence. If there was any lingering doubt in the minds of any of ARM’s customers that ARM could be bought by a competitor, that doubt has now been removed.

        • w76
        • 4 years ago

        You think they can double the headcount in Cambridge, per the article, and boost the global workforce too without providing additional capital to ARM? The whole point seems to be to push ARM forward faster. Maybe ARM could self-finance from cash flow, but I’m thinking SoftBank will inject a little to get the ball rolling.

          • cygnus1
          • 4 years ago

          Either way, if Softbank ‘injects capital’ or just lets ARM use cash reserves or cash flow, it’s all Softbank’s money after the sale. The bottom line is that ARM is going to most likely double what it’s spending on people. That’s not a guaranteed way massively accelerate anything, but hopefully it works out well.

          • blastdoor
          • 4 years ago

          ARM has about a billion in cash and virtually no debt, so they don’t need a capital injection to hire another 2,000 people or so.

          Perhaps this expansion plan has its origins with ARM’s management, but the previous board wasn’t willing to take the risk? Just speculating — I don’t know.

    • blastdoor
    • 4 years ago

    I have the impression that SoftBank is a little bit like a tech-oriented Berkshire-Hathaway. If so, then this takeover should have little consequence for ARM’s customers/partners. I guess one positive is that this prevents anybody else from buying ARM in order to hurt competitors.

    • DragonDaddyBear
    • 4 years ago

    Wait, what just happened? ARM is THE world leading IP for chips. Were they secretly in trouble or something?

    EDIT: Why the down votes?

      • Chrispy_
      • 4 years ago

      nope, but the stupidity of Brexit made the £ about 15-20% less valuable than before, effectively giving foreign investors 15-20% better value.

      What’s happened is that Softbank can now afford to make a buyout offer that’s difficult to refuse – the offer is 43% higher than the company worth, which to greedy shareholders is like a huge financial incentive to sell out.

        • Ushio01
        • 4 years ago

        Except the share price before the bailout is double what it was in 2012. Softbanks just in a buying splurge at the moment.

        • Goty
        • 4 years ago

        Believe me, this deal was in the works long before the Brexit vote took place. For them to have announced now, the deal has to have been essentially done probably for at least a month or so and in the negotiating phase for quite a long time before that.

          • DragonDaddyBear
          • 4 years ago

          Good point. But I think the Brexit probably made it a very good deal for SoftBank.

            • Chrispy_
            • 4 years ago

            Yeah, being able to offer 15-20% more was the reason it’s now under serious consideration.

            • w76
            • 4 years ago

            That assumes Yen/Sterling stays stable. They’re talking essentially straight-up helicopter money over there, with Bernanke apparently flying over recently to give advice towards that end. The exchange rate has already closed half the post-Brexit gap, let BOJ open the floodgates a little wider and it might reverse, particularly if Carney doesn’t try to compete on who can debase quickest. Given the strength of the British economy relative to Japan, there’s no way Carney should follow BoJ as aggressively. If my suspicion is right, that BoJ is about to ramp up QE to a new scale or even outright monetization, then exchange rates could turn against SoftBank by the time the deal closes, which could take a long time. I just waited 9 months for a deal between two insurers to close, and several months of that was after the final regulator approved.

            Anyway, your whole argument seems to be “I’m mad about Brexit,” but I think SoftBank is sophisticated enough to know they can’t count on the exchange rate being anything specific. They’ll probably, at some point, buy some currency hedges and hope for the best.

            • NovusBogus
            • 4 years ago

            I have to admit, using the yen to make a political point regarding currency stability made me lol hard. And yeah, it’ll take a long time for the deal to actually close. The bureaucracy and financial wrangling is about three times more convoluted for an international deal like this, since both states’ strategic assets guys will be involved.

          • curtisb
          • 4 years ago

          That may be, but Brexit was in the works long before the actual vote took place, as well. It didn’t come about over night.

        • smilingcrow
        • 4 years ago

        “Brexit made the £ about 15-20% less valuable than before”

        The pound averaged less than $1.45 between January and the referendum and post referendum has averaged around $1.33 which is a drop of ~8%.
        During the last six months of 2015 it averaged around $1.53 which makes the current price ~13% lower.
        Where do you get the 15-20% values from?

          • w76
          • 4 years ago

          He’s just mad about Brexit it seems, however, SoftBank being Japanese, should probably compared the Yen/Sterling currency pair, unless the deal is being transacted in USD (which wouldn’t be unheard of, a lot of cross-border deals are, so I could be wrong!).

            • smilingcrow
            • 4 years ago

            You are correct and I was lazy and didn’t look at the Yen.
            It has dropped a lot more so the two figures I gave for the dollar for the yen are 12.5% and 24%. So half the difference relates to 2015/H2 but over the year the absolute low is 33% off the peak which is a massive drop.
            The Euro is 19% off the peak over the year which is much less so Japan is a lot more than Brexit.

            • Chrispy_
            • 4 years ago

            Nah, I work for an international firm reliant on business from all over the world; Brexit changes very little for me other than potentially an increase in right-wing politics (which actually benefit me but seem a terrible idea for the population as a whole).

            • NovusBogus
            • 4 years ago

            Right wing politics may not be good for the general population, but I can’t see it being worse than what left wing politics has already done. I’m told there was a time when normal people in the Western world owned property and didn’t all hate each other, but I’m too young to have experienced it.

          • Chrispy_
          • 4 years ago

          Market shock on the day of the referendum announcement. It has since recovered but it will nosedive again once article 50 is triggered. 31 year low, too.

          I don’t claim to be an economist, but economists are unanimously predicting a significant drop in the value of the pound, and it’s this predicted drop that’s driving foreign investment. I normally don’t care too much about economics because a lot of it is guesswork, but in a field where economists rarely agree on anything, a near-unanimous agreement probably means it’s unavoidably obvious.

            • w76
            • 4 years ago

            I’m an economist, and will tell you this about economists: if anyone claims economists are unanimous on anything, they’re already not being honest. It’s not related to the SoftBank deal so I won’t go in to detail, but I (and many others) think the impact of Brexit has been largely overblown, and teasing out its effects will be statistical hell from the much larger effects of relative central bank policies around the globe and what may be crashing waves of Euro-zone calamity washing across the English Channel over the coming couple years.

            I sure don’t intend to bet any money on exchange rates.

            • Chrispy_
            • 4 years ago

            The “unanimous” verdict of economist on a Brexit wasn’t that the UK economy would collapse, just that it would be worse off.

            Whether that’s 1% worse off or 50% worse off, nobody can agree, but like you I don’t think it’ll be that significant because the financial issues affecting the rest of Europe will steal the limelight over the next half decade.

      • tipoo
      • 4 years ago

      No, that’s why Softbank paid a lofty ~43% premium on their market price. You always pay a margin over their market cap for full control, but this was a bit on the high end. ARM was doing great, but as a public company they have to do what the shareholders want, and the shareholders like money.

        • the
        • 4 years ago

        The real thing that enabled this sale wasn’t ARM doing poorly but the British pound. Between the high premium over market cap and continued uncertainty around Brexit, there is good motivation for the share holders to sell even with ARM doing rather well in the market.

      • nanoflower
      • 4 years ago

      ARM is a publicly traded company. As such when someone comes up with a great offer there really isn’t much choice but to put it up for the stockholders to vote on. As Chrispy- says with Brexit the company became much cheaper making it easier to go forward with the sale.

      • flip-mode
      • 4 years ago

      Don’t know why those downvotes; have an upvote.

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