decor decor
"Genius is one percent inspiration, ninety-nine percent perspiration"

-Thomas Edison

SoftBank to Acquire ARM

Financial Information
  • Enterprise Value                                        £23.5 billion
  • EV/LTM Revenue                                      23.1x
  • EV/LTM EBITDA                                        51.8x
Transaction Facts
  • Japanese multinational telecommunications conglomerate SoftBank (TYO: 9984) announced today that it was acquiring British semiconductor designer ARM Holdings (Nasdaq: ARMH) for £23.5 billion, or approximately $32 billion.
  • ARM, founded in 1990, designs microprocessors for devices such as Apple iPhones and Samsung smartphones while licensing blueprints to chip makers like Qualcomm.
  • SoftBank, which began as a software distributor in 1981, became one of Japan’s three largest telecom companies in the 2000s. The company recently sold approximately $10 billion of shares in Alibaba to pay down its debt, reducing its stake in the Chinese IT giant from 32 percent to 28 percent.
  • Following the deal, SoftBank announced its intentions to double the size of ARM’s UK team, currently numbering approximately 1,600.

Size Matters

  • Big In Every Way: This deal is a big deal by many calculations, testifying to today’s business climate and its conduciveness to M&A. It’s SoftBank’s largest investment ever, according to Dealogic, and it’s the third-largest proposed merger this year after Bayer’s offer for Monsanto and ChemChina’s bid for Syngenta.
  • Chips Ahoy: ARM is a significant player in the chip space. Though it does not build chips itself, chips it designs are at the heart of not just phones but also routers and other networked devices (a space where it expects to grow its 15 percent market share to 45 percent by 2020) as well as in servers (a market historically dominated by Intel). The deal would be the second largest chip deal on record after Avago’s $37 billion buy of Broadcom.
  • Buying in to Big Potential: SoftBank CEO Masayoshi Son emphasized that this deal represents a sizable investment in the Internet of Things, a space where he expects significant market interest (and subsequent demand) in coming years.
  • What Brexit?: This deal, the largest takeover of a British company by an Asian company, is being celebrated by the British government as a sign that there is still significant interest in foreign investment despite the uncertainties brought about by Brexit. While the weakening pound has made British companies on the whole more affordable, the increase in value of ARM’s shares since the Brexit has outpaced the currency advantage and offset any “Brexit discount.”
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

01 Dec 2023

Insight Acquires SADA

Financial Information ($USD) Purchase Price: $410 million cash free debt free Earnout: Up to $390 million with a target of $210 million EV/EBITDA: Approximately 11.3x, based on purchase price plus target earnout and $55 million of EBITDA  Transaction Details Insight Enterprises (NASDAQ: NSIT) today announced it has completed a $410M acquisition of SADA, a leading...

22 Feb 2023

How Microsoft Channel Partners Can Command High Valuations

In today’s rapidly changing ecosystem, simple organic growth doesn’t give Microsoft Channel Partners long-term competitive advantage.   During the last five years, Microsoft Channel Partners have commanded high valuations due to strong and sustainable business models, as well as a track record of profitability. Most were small mid-market businesses that had to decide to be...

18 Jan 2023

IT Industry Titan John McKenna Announces Retirement 

Congratulations to John McKenna, CEO of ConvergeOne, who announced his retirement today after 14 years at the helm. John has been an integral part of the IT industry for more than 30 years, and his leadership, dedication, and hard work have set the gold standard as a titan in our industry.   John’s tenure at...