ARM Holdings snapped up for £24bn by Japan's SoftBank
ARM Holdings, Britain's most successful technology company, is on course to double its workforce after being bought for £24bn deal by Japan-based SoftBank.
SoftBank has said it will launch a major recruitment drive while maintaining ARM's existing management team following its swoop for the Cambridge-based firm, which supplies technology for Apple's iPhone and most other major phone manufacturers.
The deal was branded ‘one of the largest ever from Asia into the UK’ by Chancellor Philip Hammond and valued the technology firm at 1700p per share, a 43 per cent premium on Friday's closing share price of 1189p.
The combined group hopes the acquisition will allow it to capitalise on the increasing number of low-power gadgets resulting from a boom in the ‘Internet of Things’ (IoT).
Stuart Chambers, chairman of ARM, said: "SoftBank has given assurances that it will invest considerably in the business, including doubling the UK headcount over the next five years and maintaining ARM's unique culture and business model."
However, experts have warned that the deal could lead to a ‘brain drain’ if ARM Holdings' businesses are moved out of the UK.
Analysts also expect more British firms to become foreign takeover targets, with the plunge in the value of the pound making UK firms cheaper following the Brexit vote.
The announcement comes as an early test for Prime Minister Theresa May, who has vowed to defend British companies from foreign buyers.
But Hammond said the tie-up between ARM Holdings and SoftBank would "guarantee to double the number of jobs in ARM and turn this great British company into a global phenomenon".
He added: "Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business - and open to foreign investment.
"Softbank's decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth. And as ARM's founders will testify, this is the greatest place in the world to start and grow a technology business."
As part of the deal, ARM Holdings will keep its headquarters in Cambridge, while efforts will be made to grow ARM's workforce outside of the UK.
The firm, which employs 3,000 people in the UK, saw its results come in ahead of expectations in April as pre-tax profits lifted 14 per cent to £137.5m in the first quarter year-on-year, while revenues also stepped up 22 per cent to £276.4m over the period.
ARM's directors will recommend the deal is accepted by shareholders at its forthcoming general meeting.
Masayoshi Son, chairman and chief executive of SoftBank, said the investment marked its strong commitment to the UK and the ‘competitive advantage’ of the science and technology industries in Cambridge.
Mark Skilton, a Professor of Practice at Warwick Business School, an expert on technology and the IoT said: “The purchase by Japanese telecom SoftBank of ARM holdings for $32bn is a logical step for ARM’s shareholders in an increasingly tough global chip market seeking new growth markets.
“The 50 per cent premium on valuation is a good price with a conglomerate that has a track record in company purchases positioning more investment in ARM, assuming the UK government doesn't block the deal for national strategy reasons.
“The concern of brain drain and ARM business moving from the UK must be considered in this equation based on its knowhow and leadership in chip design.
"The IoT cited by CEO Masayoshi Son of SoftBank is the new chip market for connected devices. While storage and chip speed is one area, ARM has excelled at chip design for many consumer devices including the Apple iPhone.
“This move by ARM is recognition of the limits of this current market and the need to invest to expand beyond PC and mobile into the multitude of consumer home, building, car and other platforms emerging in the IoT."