Japan's SoftBank acquires ARM Holdings for $32 billion
What's the story
Japan's SoftBank Group announced its acquisition of U.K. based ARM Holdings for $32 billion. Softbank's largest ever deal is intended to significantly bolster its presence in the IoT segment. ARM Holdings will receive GBP 17 per share, a 43 percent premium on last week's closing price, in this all-cash deal. ARM's acquisition is considered the biggest for a technology company in Europe.
ARM Holdings' evolving trajectory
Britain's ARM Holdings
ARM Holdings is the dominant player globally in the processor market; its biggest clients include Apple and Samsung. It designs chipsets for smartphones, consumer appliances and boasts of a robust IP portfolio. Slowdown in the smart phone market has led ARM to focus on investments in 'Internet-of-Things' devices. Revenue forecasts for the IoT segment are expected to equal that of mobile phones by 2020.
Data
What is 'Internet-of-Things'?
'Internet-of-Things' or 'IoT' is essentially a network of physical objects (home appliances, cars, wearable devices, thermostats etc.) embedded with an IP address and connected to the Internet that allows data to be collected, exchanged in order to store, track and analyse respective gadget's functioning.
Moving from telecom to 'Internet-of-Things'
SoftBank's paradigm shift
SoftBank's acquisition of ARM Holdings, is part of Masayoshi Son's broader vision of a "future where everything is connected and computerized". Last week, SoftBank had also announced a joint venture with Japanese IoT service provider Aeris. Aeris will now expand in Japan and globally to provide IoT and telematic services with assistance from technology major SoftBank.
April 2016
Mergers & Acquisitions in the IoT segment heating up
Strategy Analytics' report released in April this year reflects the frenetic pace of transactions in the 'Internet-of-Things' segment. The number of deals hit an all-time high in 2015. In the last six months, notable deals have included Cisco's acquisition of Jasper Technologies' IoT platform for $1.4 billion, Intel's acquisition of Altera for $16.7 billion and multiple acquisitions by IBM.
Data
SoftBank's largest acquisition prior to ARM Holdings
SoftBank acquired Sprint Nextel, the 3rd largest mobile carrier in the U.S. for $22 billion in mid-2013, to position itself as a competitor to telecom giants like Vodafone and T-Mobile. Post-acquisition of Sprint, SoftBank was left struggling with a humongous debt 4 times its EBITDA.