2016-07-19

FTSE100 Hits New High on SoftBank & UK’s ARM Holdings $32 Billion Deal

FT Lex on SoftBank’s purchase of ARM Holdings:

Masayoshi Son, SoftBank’s founder and chief executive, is betting that Arm is 43 per cent more valuable than the market thinks it is. FT.com's Robert Armstrong examines whether he's right or wrong. 

UK's benchmark index FTSE100 is now UP 5.64% since the Brexit vote on June 23
On news of the SoftBank - ARM Holdings deal on Monday, July 18, 2016, the London Stock Exchange benchmark index FTSE100 rose, closing at 6,695.42, its highest level since August, 2015. ARM Holdings plc is a British multinational semiconductor and software design company (domain name: arm.com). Processors based on designs licensed from ARM, or designed by licensees of one of the ARM instruction set architectures, are used in all classes of computing devices such as microcontrollers in embedded systems (cars' ABS), smartTVs (Google TV), all modern smartwatches (such as Qualcomm Toq), as well as smartphones, tablets, laptops, desktops, servers and supercomputers/HPC.

Stock exchanges: symbols  LSE: ARM and NASDAQ: ARMH

Details of the deal:
  • ARM’s headquarters will remain in Cambridge, England, UK, as well as its senior management team, and SoftBank pledged to at least double employee headcount in the UK over the next five years. ARM currently employs about 4,000 people.
  • At £17 per share, the ARM acquisition is a 43% premium over last week's closing price.
  • Post-Brexit UK welcomes ARM purchase in test of strategy: "Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors,” Chancellor of the Exchequer Philip Hammond said. “Britain is open for business -- and open to foreign investment. SoftBank’s decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth.”--Bloomberg.com
  • ARM CEO says deal made regardless of Brexit, noting ARM's stock was up 15% since EU referendum (Brexit vote), see Accelerating Tech: Simon Segars, CEO of ARM, explains SoftBank’s offer for ARM (video)
  • "As purely a designer of chips rather a manufacturer, Arm’s intellectual property model leaves it with a high profit margin. However, its revenues of about £1bn last year made it a minnow by global chip standards. The purchase price is equivalent to 70 times its net income last year, and more than 50 times earnings before interest, taxes, depreciation and amortisation."--SoftBank to acquire UK’s Arm Holdings for £24.3bn | FT.com
  • Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners Inc.: "... we believe if Son wanted to bet on the sterling recovering he picked a great name in the tech sector.”--SoftBank to Buy Britain’s ARM for $32 Billion in Record Deal | Bloomberg.com 

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