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SoftBank Group Nears Deal to Buy ARM Holdings SoftBank Group Nears Deal to Buy ARM Holdings
(about 4 hours later)
SoftBank is nearing a deal to acquire ARM Holdings, the British semiconductor company, said two people briefed on the matter who asked not to be named discussing private information.SoftBank is nearing a deal to acquire ARM Holdings, the British semiconductor company, said two people briefed on the matter who asked not to be named discussing private information.
The deal would be the first large-scale, cross-border transaction in Britain since it voted to exit the European Union last month. ARM had been seen as a safe haven from the volatility surrounding “Brexit” because its chip technology is used in mobile phones all over the world, with limited revenue derived from Britain.The deal would be the first large-scale, cross-border transaction in Britain since it voted to exit the European Union last month. ARM had been seen as a safe haven from the volatility surrounding “Brexit” because its chip technology is used in mobile phones all over the world, with limited revenue derived from Britain.
ARM, which designs chips and parts of chips, had a market capitalization of about $22 billion as of Friday’s close. ARM would be one of SoftBank’s largest acquisitions ever.ARM, which designs chips and parts of chips, had a market capitalization of about $22 billion as of Friday’s close. ARM would be one of SoftBank’s largest acquisitions ever.
ARM had been a leader in chips for mobile devices in the early years, while other semiconductor companies were focused on desktops. The switch to mobile has been difficult for ARM’s competitors, particularly Intel, placing ARM in a prime position to dominate the market for chips used in cellphones and tablets.ARM had been a leader in chips for mobile devices in the early years, while other semiconductor companies were focused on desktops. The switch to mobile has been difficult for ARM’s competitors, particularly Intel, placing ARM in a prime position to dominate the market for chips used in cellphones and tablets.
SoftBank, based in Tokyo, invests in technology, media and telecommunications companies, and ARM could provide an additional boost to SoftBank’s mobile strategy. SoftBank owns about 83 percent of the American wireless operator Sprint, meaning that withthe acquisition of ARM, SoftBank would own the carrier and the chip designer. SoftBank, based in Tokyo, invests in technology, media and telecommunications companies, and ARM could provide an additional boost to SoftBank’s mobile strategy. SoftBank owns about 83 percent of the American wireless operator Sprint, meaning that with the acquisition of ARM, SoftBank would own the carrier and the chip designer.
Requests made to ARM for comment were not immediately returned. A representative from SoftBank declined to comment.Requests made to ARM for comment were not immediately returned. A representative from SoftBank declined to comment.
SoftBank has been selling assets and raising cash, which is typical for a company gearing up for a big acquisition. Last month, SoftBank agreed to sell its majority stake in Supercell, the developer of “Clash of Clans” and other mobile games, to Tencent Holdings for about $8.6 billion. It also pared back about $10 billion worth of shares in Alibaba, the Chinese internet giant.SoftBank has been selling assets and raising cash, which is typical for a company gearing up for a big acquisition. Last month, SoftBank agreed to sell its majority stake in Supercell, the developer of “Clash of Clans” and other mobile games, to Tencent Holdings for about $8.6 billion. It also pared back about $10 billion worth of shares in Alibaba, the Chinese internet giant.
SoftBank has made some big moves at the top as well. The company said last month that Nikesh Arora, who joined SoftBank two years ago from Google, would be leaving. He had been seen as the heir apparent to Masayoshi Son, the company’s founder and chief executive, and someone who could catapult SoftBank and its global ambitions through deal making. But once he stepped down, Mr. Son signaled that he was not yet ready to give up control.SoftBank has made some big moves at the top as well. The company said last month that Nikesh Arora, who joined SoftBank two years ago from Google, would be leaving. He had been seen as the heir apparent to Masayoshi Son, the company’s founder and chief executive, and someone who could catapult SoftBank and its global ambitions through deal making. But once he stepped down, Mr. Son signaled that he was not yet ready to give up control.
ARM has become somewhat of a secret success. The company, based in Cambridge, England, makes chips for a large majority of the world’s cellphones. ARM generates more than $1 billion in annual revenue by licensing its designs to large chip-makers.ARM has become somewhat of a secret success. The company, based in Cambridge, England, makes chips for a large majority of the world’s cellphones. ARM generates more than $1 billion in annual revenue by licensing its designs to large chip-makers.
ARM traces more than half of its revenue to Asia, while about 38 percent comes from North America. Only 1 percent of its revenue isfrom Britain, according to its latest annual report. ARM traces more than half of its revenue to Asia, while about 38 percent comes from North America. Only 1 percent of its revenue is from Britain, according to its latest annual report.
ARM was founded in 1990 and has grown into a company with 4,000 employees, a majority of them engineers. In 2015, ARM’s customers said they shipped about 15 billion chips, with just under half of those going into mobile devices, the company said in its annual release.ARM was founded in 1990 and has grown into a company with 4,000 employees, a majority of them engineers. In 2015, ARM’s customers said they shipped about 15 billion chips, with just under half of those going into mobile devices, the company said in its annual release.
Chip-makers have found themselves in the middle of rampant consolidation over the last few years, as the industry has reached a state of maturity, leading smaller players to combine to better compete. This deal would be among the largest mergers in the industry since Avago Technologies agreed to acquire Broadcom for almost $40 billion in May, 2015. Several months earlier, NXP Semiconductors spent about $12 billion to buy Freescale Semiconductor.Chip-makers have found themselves in the middle of rampant consolidation over the last few years, as the industry has reached a state of maturity, leading smaller players to combine to better compete. This deal would be among the largest mergers in the industry since Avago Technologies agreed to acquire Broadcom for almost $40 billion in May, 2015. Several months earlier, NXP Semiconductors spent about $12 billion to buy Freescale Semiconductor.