Chancellor says sale of country’s most successful technology company shows ‘Britain has lost none of its allure to international investors’

This article is more than 4 years old

This article is more than 4 years old

ARM Holdings has agreed to be sold to Japan’s SoftBank for £24.3bn, in a deal that will see Britain’s most successful technology company transferred to foreign ownership to capitalise on the growth of “the internet of things”.

The Cambridge-based group, whose microchips are used in the iPhone and more than 95% of all smartphones, said its board would recommend the all-cash deal to shareholders.

SoftBank will pay £17 a share – 43% more than ARM’s closing share price on Friday and 41% more than ARM’s all-time high closing share price. ARM shareholders will also received an interim dividend of 3.78p a share.



The deal will trigger multimillion pound windfalls for many ARM board members, including the chief executive, Simon Segars, whose shares are worth more than £11m, and the chief operating officer, Mike Muller, whose stake is valued at £21m.

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SoftBank said buying ARM would help make it a leader in the nascent internet of things, which enables objects such as fridges, cars and buildings to collect and exchange data.

Although ARM is best known for its link to the iPhone, fewer than half the 15bn microchips produced to its design last year were used in smartphones. The rest were used in the many everyday devices that now require processing power, such as washing machines and televisions.

Stuart Chambers, the chairman of ARM, said: “This is a compelling offer for ARM shareholders, which secures the delivery of future value today and in cash. The board of ARM is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology.”



If the deal goes through, the acquisition will deliver one of Britain’s most successful companies into overseas hands. Theresa May’s new Conservative government has promised to block foreign takeovers if they harm the public interest but ARM and SoftBank had discussions with the government before the announcement.

The deal was hailed by the new chancellor, Philip Hammond, who said: “Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business – and open to foreign investment.”



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He added: “Softbank’s decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth. And as ARM’s founders will testify, this is the greatest place in the world to start and grow a technology business.”

SoftBank, whose business spans telecoms, the internet and robot technology, has promised to at least double ARM’s UK workforce of 1,600 and to increase headcount outside the UK over the next five years. ARM, which employs 4,064 people worldwide, will keep its Cambridge base and top management and will operate as an independent business, SoftBank said.

ARM shares rose 43% to £16.99, in line with the offer price, suggesting investors see a rival bid as unlikely given the hefty premium and commitments made by SoftBank to secure an agreed deal.

The deal would be one of the largest in European technology to date, and SoftBank’s largest ever, bigger than the £17bn acquisition of a controlling stake in wireless operator Sprint in 2013, a deal that left the group with hefty debts. SoftBank said it would pay for the acquisition out of existing cash and a loan arrangement with Japan’s Mizuho Bank.

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SoftBank made its offer less than a month after the Japanese group’s founder, Masayoshi Son, scrapped plans to leave the company. He said at the time he wanted to develop Sprint and complete the transformation of SoftBank into an internet investment powerhouse.

Son said: “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. This investment also marks our strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent in Cambridge.”

The deal comes weeks after Britain voted to leave the EU, battering sterling and strengthening the yen. However, the rise in ARM’s share price since 23 June has more than offset the weakened pound.



A spokesman said the deal made ARM 7% more expensive for SoftBank.

SoftBank bought UK imaging specialist Apical earlier this year, a company that specialises in technology to allow computers to analyse images – replicating human vision using software.