Japan's SoftBank Confirms Offer To Purchase ARM Holdings For $31.4 Billion In Cash

If you currently are in possession of a smartphone (and who isn’t these days), there’s probably close to a 99 percent chance that it’s running on a processor that was originally designed by ARM Holdings. ARM doesn’t actually build the chips that you find in smartphones like Apple’s iPhone 6s or Samsung’s Galaxy S7 Edge; but it does license its processor designs and related IP directly and allows licensees to create their own custom processors using ARM instruction set compatible architectures.

A big shakeup is about to happen at ARM, because Japanese powerhouse SoftBank has offered to purchase the British multinational tech company for around $31.4 billion in cash. This lofty price tag represents a 43 percent premium over the closing price of ARM shares last week (ARM shares have been relatively flat for the past 52 weeks).

ARM Processor Chip

There were nearly 15 billion devices sold globally in 2015 that contained ARM chips; up from 12 million in 2014 and a far cry from the mere 3.9 million ARM chips shipped back in 2009. ARM’s processor designs can be found in everything from smartphones to tablets to wireless routers to IoT devices to even your cloud-connected car. With such a wide reach into products that many of use on a daily basis, it should come as no surprise that ARM would be ripe for a takeover.

It’s been noted that both Apple and Intel have been interested in purchasing ARM in recent years. The former definitely has plenty of overseas cash that it could use to complete the transaction, and the latter botched its chance to be a global leader in ARM chip manufacturing by fumbling the ball with its XScale processor family in the early 2000s. Intel eventually sold its XScale PXA mobile processor assets to Marvell Technology in late 2006.

For those unfamiliar with the SoftBank, it was formed in 1981 and is currently the third largest publicly-traded company in Japan (behind Toyota and Mitsubishi UFJ Financial). SoftBank is also the third largest mobile phone company in Japan (behind NTT Docomo and KDDI) and is the parent company of fourth place U.S. wireless carrier Sprint.