ARM Holdings (ARMH) Shares Rocket on SoftBank Acquisition

Shares of ARM Holdings Plc (ARMH) were trading up +20.63 or +43.82 percent to $67.71 per share in Monday’s premarket after news that Japanese conglomerate SoftBank Group Corp. (SFTBY) will buy the company in a deal worth $32 billion. ARM Holdings stock closed at $47.08, down -0.36 or -0.76 percent in Friday’s regular trading session.

Stock Analysis

Founded in 1990 as a spinoff collaboration between Apple Inc. (AAPL) and Acorn Computer Group, Cambridge, England based ARM Holdings Plc is a UK multinational semiconductor and software design company specializing in the development and manufacture of ARM processors, also known as CPUs.
The company also makes software development tools under the Keil, DS-5 and RealView brands and develops systems and platforms such as system on chip (SoC) software and infrastructure.

ARM Holdings is considered to be a dominant force in the manufacture of processors for mobile phones and tablet computers and is one of the best known “Silicon Fen” companies. The company dominates the market for wireless microprocessors for the Apple iPhone and has developed the chips in 95 percent of all smartphones. The company’s stock is listed on the London Stock Exchange and is a component of the UK FTSE 100 Index. The company’s shares have a secondary listing on the NASDAQ.

Tokyo, Japan based SoftBank Group Corp. was founded in 1981 and is a multinational Internet and telecommunications company with operations in e-commerce, technology services, telecommunications, Internet, finance, media and marketing among other businesses. As of early 2015, SoftBank was the third largest public company in Japan after Toyota and Mitsubishi. The company’s subsidiaries include Sprint Corporation, acquiring a 78 percent ownership interest in 2013, Yahoo! Japan and Supercell to name just a few.

The deal, which was announced early this morning will have SoftBank Group Corp. pay $32 billion for ARM Holdings, which is a +43 percent premium over ARM Holdings’ stock’s closing price on Friday. Neither company has officially commented on the deal, however according to reports, SoftBank intends to keep the company intact under its current management and brands. In addition, sources said there were plans to expand ARM’s workforce after the deal, doubling its employment in the UK and increasing its hires outside of the UK.

Masayoshi Son, Chairman and Chief Executive Officer of SoftBank told reporters in London on Monday that, “This is a company I always admired for the last 10 years. This is the company I wanted to make part of Softbank. I am so happy.” He added that, “We did not need to do this, it's my way of showing commitment to the U.K.”

The British Treasury issued a statement on Monday in which they 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.”

Son said that the deal was not struck because of the devaluation of Sterling due to the Brexit referendum three weeks ago, but admitted that he had met only two weeks ago with ARM’s Chairman to make a bid. The SoftBank Chairman pledged to double the company’s UK employment within the next five years and even offered to make it “legally binding”, which means a court could take action if the pledge is not fulfilled.

Other News About ARMH

SoftBank expects regulators to back deal for UK's ARM

SoftBank CEO Masayoshi Son told reporters he does not expect regulators to oppose the takeover.

Softbank Targets 'Internet of Things' With ARM Bid

SoftBank said it was investing “to capture the very significant opportunities provided by the 'Internet of Things'."

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Published on Jul 18, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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