Japanese internet and telecommunications company SoftBank has reached an agreement to purchase United Kingdom-based chip manufacturer ARM for £23.4 billion, which is equivalent to about $31 billion.
The all-cash deal marks a big move by SoftBank into mobile internet, and comes right after the decision of its CEO Masayoshi Son to take back control of the investment strategy of the company from his designated successor and former deputy, Nikesh Arora, who left SoftBank in June.
ARM is the most valuable tech company listed in London and a big name in the mobile processing industry — with Apple, Samsung and Huawei among its customers for its graphics and processor technology.
SoftBank's acquisition of ARM would be one of the biggest in the European technology industry to date, and the biggest purchase the company has made so far. The acquisition price for ARM will eclipse the $22 billion price tag it paid for a controlling stake in Sprint back in 2013, which is a deal that has drained the company's finances as the losses of the carrier continues.
SoftBank has been looking to raise money over the past months to increase its cash position and pay down its debt. Among the deals it recently made include the sale of shares worth about $10 billion in Chinese e-commerce firm, Alibaba; and the sale of its whole stake in Supercell Oy to China's Tencent. The deal with Tencent valued Supercell at more than $10 billion, and SoftBank is expected to receive more than $7 billion in the sale.
The purchase agreement for ARM also comes less than a month after the decision of the United Kingdom to leave the European Union, which decreased the value of the British pound. This made companies based in the UK attractive targets for acquisitions by overseas companies, though new British Prime Minister Theresa May recently expressed caution over foreign takeovers of big companies in the country.
SoftBank is hoping that ARM will be a good investment for the conglomerate as it looks to get back on track. ARM shipped 15 billion chips in 2015, which is an increase of 3 billion compared to the company's sales the year before, proving the chip maker's name in the smartphone industry with relationships with major smartphone manufacturers. This is compared to bigger rivals, such as Intel, that have been struggling to produce chips for mobile devices of similar quality.
The group launched more than 30 years ago as a software distributor but has widely expanded since then, transforming into one of the three major telecommunications companies and holding assets in a variety of industries, including the robotics industry with Pepper the humanoid robot.
