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Softbank Buys ARM Holdings For $32 Billion

Softbank is buying mobile chip designer ARM Holdings in a deal that shows the Japanese technology giant is not holding back on making big bets on future tech trends like the Internet of Things, especially not when currency fluctuations make for an enticing deal.

Softbank has agreed to buy ARM for £24.3 billion ($32 billion), or £17 per share in cash, a 43% premium on ARM’s closing price last week. ARM’s chip designs are found in the vast majority of smartphones including Apple’s iPhone and Samsung’s Galaxy series,

Though ARM’s shares have steadily climbed over the last decade thanks to its market dominant position in smartphones, its future lies in designing the architectures for chips that will power the Internet of Things.

“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the ‘Internet of Things,’” said Softbank’s chief executive, Masayoshi Son, in a statement announcing the deal on Monday morning.

“This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

ARM, based in Cambridge, UK, is renowned for licensing chip designs that require less power than those sold by competitors like Intel, hence why its blueprints are present on more than 95% of the world’s smartphones.

Increasingly, though, more of ARM’s blueprints for the ultra-small Cortex-M chips are being used in the micro controllers that power Internet-of-Things gadgets like the Nest thermostat system, the Pebble smartwatch, the FitBit One, and Qualcomm’s Toq smartwatch. 

The deal comes just weeks after the United Kingdom voted to leave the European Union, a referendum which raised questions about the attractiveness of businesses there. The vote’s result, however, also resulted in a drop in the British pound, making UK businesses significantly cheaper. Since the start of 2016, for instance, sterling has dropped by 23% against the Japanese yen.

Britain’s chancellor of the exchequer, Philip Hammond, praised the deal on Monday, saying on Twitter that it showed the UK had “lost none of its allure to global investors.”

It’s certainly possible that Softbank’s ARM deal could herald more of acquisitions of British technology companies, as acquirers seek to pick up some of the academic and engineering talent that runs rife in firms here, while taking advantage of the lower pound. The deal also comes on the heels of Microsoft’s mega-acquisition of LinkedIn, raising questions of whether 2016 will see more consolidation in the tech sector.

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