The BBC reports British chip designer and Apple partner ARM Holdings is about to be acquired by Japan-based SoftBank for $31.4 billion. The report says ARM’s board is expected to recommend to shareholders that they accept the offer, which is a 43% premium over the stock’s closing market value of $22.2 billion last week.
Shares in the U.K. technology firm surged by 45 percent at the open of the London Stock Exchange this morning on news of the deal, adding $10 billion to ARM’s market value.
ARM was founded in 1990, and currently employs 3,000 staff members. If the acquisition is completed, it will be the biggest ever purchase of a European technology firm. The transaction will reportedly be funded via Softbank’s own cash reserves, and a long-term loan from Japan’s Mizuho Bank.
The Cambridge-based firm is the designer of the processors that power Apple’s lineup of iOS mobile devices. It also designs the processors found in many of Samsung’s mobile devices. The company receives a royalty on each chip that is made based on its designs. Last year saw over 15 billion ARM-designed processors shipped worldwide, up 3 billion from the previous year.
Softbank is a technology goliath, owning Vodafone’s Japanese operations, as well as U.S. telecom Sprint. The Japanese firm gobbled up Sprint in a $20 billion deal back in 2013. At the time, that was the biggest foreign acquisition ever by a Japanese firm.
Chairman and chief executive of Softbank, Masayoshi Son, commented on the deal, saying:
We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market leader in its field. ARM will be an excellent strategic fit with the Softbank group as we invest to capture the very significant opportunities provided by the Internet of Things.
ARM says it will continue to be based in Cambridge, and expects to double the number of its staff over the next five year. The firm’s organization existing senior management structure and partnership-based business model is also expected to stay intact.