Softbank Group To Acquire Arm Holdings

[FreeTrader]

Official announcement: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/ARM/12895269.html

Financial Times: SoftBank to buy UK’s Arm for £24.3bn

From the release:

SoftBank intends to:

- preserve the ARM organisation, including ARM's existing senior management team, brand, partnership-based business model and culture to ensure continuity of a strong track record;

- maintain the headquarters of ARM in Cambridge;

- at least double the employee headcount in the UK over the next five years thereby enabling ARM to continue to develop leading-edge technology in the UK; and

- increase the headcount of ARM outside the UK over the next five years.

Edited July 18, 2016 by FreeTrader

[Frugal Git]

Yup...Checked my watchlist this morning and let out an audible sigh.

Bought arm in 2008 for 90p, sold for 100p.

Price just now, £17 per share.

Ah well. A profits a profit.

[Will!]

A dirty great CGT bill for me but there are worse problems to have.

- at least double the employee headcount in the UK over the next five years thereby enabling ARM to continue to develop leading-edge technology in the UK

Cambridge needs more houses!

Edited July 18, 2016 by Will!

[spunko2010]

Am I right in being cynical that this will fly through, and another UK company will be foreign owned despite Theresa May implying otherwise?

I don't have any shares so no vested interest in it selling. Their assurances about keeping the UK HQ - am I right to be suspicious as surely a chip manufacturer can be moved to Poland, the manufacturing part isn't that skilled surely?

Edited July 18, 2016 by spunko2010

[Trampa501]

24 billion? Those high house prices in Cambridge begin to make a little sense...

[reddog]

This is what happens when a country continues to run massive current account deficit.

You have to sell of your best assets to cover to deficit.

[Will!]

Their assurances about keeping the UK HQ - am I right to be suspicious as surely a chip manufacturer can be moved to Poland, the manufacturing part isn't that skilled surely?

ARM doesn't do manufacturing.

[reddog]

Am I right in being cynical that this will fly through, and another UK company will be foreign owned despite Theresa May implying otherwise?

I don't have any shares so no vested interest in it selling. Their assurances about keeping the UK HQ - am I right to be suspicious as surely a chip manufacturer can be moved to Poland, the manufacturing part isn't that skilled surely?

To be fair ARM don't actually make any chips, only the design.

But I do agree that once ARM is just another brand in Softbanks portfolio, then it's a lot less likely that Cambridge has to be the centre of everything (particularly when all the customers are in Asia)

[FreeTrader]

UK government has welcomed the move, but some are quick to point out an apparent contradiction with Theresa May's speech in Birmingham last week:

"Because as we saw when Cadbury’s – that great Birmingham company – was bought by Kraft, or when AstraZeneca was almost sold to Pfizer, transient shareholders – who are mostly companies investing other people’s money – are not the only people with an interest when firms are sold or close. Workers have a stake, local communities have a stake, and often the whole country has a stake. It is hard to think of an industry of greater strategic importance to Britain than its pharmaceutical industry, and AstraZeneca is one of the jewels in its crown. Yet two years ago the Government almost allowed AstraZeneca to be sold to Pfizer, the US company with a track record of asset stripping and whose self-confessed attraction to the deal was to avoid tax. A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain."

[Will!]

ARM has links with Cambridge University so there's a strong argument against relocation.

[Guest TheBlueCat]

But we were told that no-one would ever want to do any kind of business with the UK ever again after we voted to leave the EU. I don't understand how this can possibly be happening.

[Will!]

But we were told that no-one would ever want to do any kind of business with the UK ever again after we voted to leave the EU. I don't understand how this can possibly be happening.

Well, the collapse in the pound may have had something to do with the timing.

[VeryMeanReversion]

- at least double the employee headcount in the UK over the next five years thereby enabling ARM to continue to develop leading-edge technology in the UK; and

It will be tough to double headcount (+4000 people) in 5 years, recruitment is hard enough already. Their share option scheme helped but that become less attractive now.

[zugzwang]

Well, the collapse in the pound may have had something to do with the timing.

Indeed. But that was supposed to bring the current account deficit down!

[Guest TheBlueCat]

Well, the collapse in the pound may have had something to do with the timing.

ARMs share price has gone up more than enough to compensate for that - which isn't surprising given that most of their revenue is likely in USD.

[Timak]

The shares were 60p each and they looked in trouble the post-2001 collapse. £17 a share now.

Don't see how they could double the headcount on the current site as they have bought out every surrounding building already.

Lots of children at my child's school have ARM employed parents and they are already moaning that despite their decent salaries they can't afford to live in Cambridge.

[winkie]

Have we not sold off much of what we have ever created.....imo these sell offs do not make things better for those who use it, only short-term gains for those that own, gain from the deal and in some cases buy it......then it was gone.

[waynezilla]

I work as an engineer for ARM.

This came out of the blue, big style. Absolutely no hint

I'm not at liberty to talk about any details, not that I know any anyway, being a humble engineer way down the food chain..

Doubling head count will be a challenge. The company has been working hard to recruit enough good engineers to meet our existing plans anyway.

Interesting times, but there does seem some synergy between out road map and their business.

[waynezilla]

The shares were 60p each and they looked in trouble the post-2001 collapse. £17 a share now.

Don't see how they could double the headcount on the current site as they have bought out every surrounding building already.

Lots of children at my child's school have ARM employed parents and they are already moaning that despite their decent salaries they can't afford to live in Cambridge.

About 1500 staff in the UK, spread across a few sites.

There is a new building being constructed alongside the existing HQ, but ARM is a now very much a global company.

Cambridge is the HQ, but there are significant headcounts in France (Sophia/Nice), US (Austin/San Jose) and India (Bangalore).

[porca misèria]

Speaking as a shareholder[1], I'd much rather have a strong, independent ARM than a one-off LEG up in my net worth.

[1] Until this morning. Damn, I'm ashamed.

[200p]

The £17 jump hasn't shown up here on this chart. There's only two things this stock did from 2007, go up, go sideways, go up.

Edited July 18, 2016 by 200p

[Guest]

If this is our post-Brexit industrial policy then the UK is utterly ******ed.

ARM is the UK's most successful technology company. It's worth about 40 times more than Imagination Technologies, which is the only other comparable UK firm I can think of. ARM processors are in almost every smartphone, tablet and set-top-box on the planet. With its new 64-bit architecture it had a good shot at taking a chunk of market share away from Intel in the server space as well.

For the government to allow the jewel in the crown of the UK's technology industry to be controlled by an overseas investor is absolute short-sighted idiocy. In the 80s they mostly shut down UK manufacturing and told us that high-tech IP firms would replace it. ARM is one of the only examples of that actually happening. To now sell off ARM's patent portfolio and intellectual property to Japan is complete and total madness.

If this goes bad I can't see Cambridge topping any 'best place to live and work' charts in the future.

For comparison, look at what happened when Microsoft bought Nokia and what it did to Finland's technology sector. £24 billion is nothing compared to ARM's value to the UK.

I had hoped that the government might actually be forced to make a success of Brexit but if our industrial policy is going to continue to be 'sell everything off cheap' then we really are going to end up bankrupt.

[CentrinoDuo]

If this is our post-Brexit industrial policy then the UK is utterly ******ed.

ARM is the UK's most successful technology company. It's worth about 40 times more than Imagination Technologies, which is the only other comparable UK firm I can think of. ARM processors are in almost every smartphone, tablet and set-top-box on the planet. With its new 64-bit architecture it had a good shot at taking a chunk of market share away from Intel in the server space as well.

For the government to allow the jewel in the crown of the UK's technology industry to be controlled by an overseas investor is absolute short-sighted idiocy. In the 80s they mostly shut down UK manufacturing and told us that high-tech IP firms would replace it. ARM is one of the only examples of that actually happening. To now sell off ARM's patent portfolio and intellectual property to Japan is complete and total madness.

If this goes bad I can't see Cambridge topping any 'best place to live and work' charts in the future.

For comparison, look at what happened when Microsoft bought Nokia and what it did to Finland's technology sector. £24 billion is nothing compared to ARM's value to the UK.

I had hoped that the government might actually be forced to make a success of Brexit but if our industrial policy is going to continue to be 'sell everything off cheap' then we really are going to end up bankrupt.

Nokia's mobile division was already on its last leg when Microsoft bought it. It was a bad decision by Microsoft and last ditch effort to get into the mobile business and Nokia is glad to finally got rid of it.

ARM is a successful UK tech company with bright future.

Spot the difference?

[silver surfer]

Zytronic, the touch screen glass manufacturer, was up 5% at one point today on the news.

That's a company that's well worth a look. Pays out a dividend yield of a shade over 5%, but the divi payout is more than twice covered by earnings, there's plenty of organic growth potential (especially with a cheaper pound) and a clear possibility of a take over. If you hold it an ISA then no tax on the dividends and no CGT if and when they get bought.

There's more to life than sovereigns!

[zugzwang]

Nokia's mobile division was already on its last leg when Microsoft bought it. It was a bad decision by Microsoft and last ditch effort to get into the mobile business and Nokia is glad to finally got rid of it.

ARM is a successful UK tech company with bright future.

Spot the difference?

Softbank has a deadbeat mobile division all of its own after acquiring the US turd Sprint Corp for a staggering $22bn in 2013. Both Moody's and S&P junk-rated Softbank debt after the deal was done.