Japan's SoftBank agrees to acquire UK's Arm Holdings for £23.4bn

Japan’s SoftBank has agreed to acquire Arm Holdings, which is UK’s top technology company which licenses chipset designs which are used in majority of the smartphones, for £23.4 billion. SoftBank is betting big on Arm Holdings considering the immense potential presented by the Internet of Things market. According to Financial Times, this acquisition of the seminconductor company will be the largest-ever acquisition of a European technology business. SoftBank is expected to pay out £17 in cash for each share in Arm which is a 43 percent premium over its closing share price last week. Arm Holdings designs chips which are ultimately used, not just in smartphones but also in smartwatches, wearables and many other IoT products. According to Arm Holdings, the number of Arm processor sporting chips sold in 2015 reached almost 15 billion, up from 6 billion just in 2010. SoftBank has been going super aggressive with its investments, thanks to its chairman Masayoshi Son’s sound investments in the past which have paid off. SoftBank is worth $68 bn and has majority stake in Sprint, fourth largest US mobile carrier as well as Yahoo Japan which is Japan’s most popular search engine. SoftBank had invested $20mn in Alibaba in 2000, an investment that’s worth $65bn today. Also the $15bn acquisition of Vodafone’s Japanese arm has made SoftBank the third largest telecom player in Japan. This is the first major acquisition by SoftBank since Nikesh Arora's departure from the company. Arora, who has been instrumental in a lot of technology company investments, is also said to have been involved with the Arm Holdings acquisition talks. SoftBank has taken part in close to 140 deals worth $82bn in the last decade, most of which have been executed under Arora’s tenure. Arm Holdings is the name that is synonymous with chipset design for mobile devices. The company which was a spin-off of Acorn which was a British company, received significant backing from Apple in the early 80s when Arm’s designs were used in Apple’s handheld Newton. The business model for Arm has been licensing its technologies to hardware makers such as Apple, Samsung and so on. As far as India is concerned, in 2014, Softbank invested $210 million in Ola along with existing shareholders, $627 million in Snapdeal and $90 million in Housing.com along with existing shareholders such as Falcon Edge. In 2015, the company invested $120 million in Grofers, $100 million in Oyo Room along with other investors.