British chip designer ARM has agreed to a buy-out by Japan's SoftBank Group in a £24.3bn deal. The proposed acquisition was announced this morning.
The purchase will be one of the biggest M&A deals in technology, and certainly the biggest in the UK.
The agreed takeover may spark a bidding war for ARM, which produces chip designs that have become the de facto standard for mobile microprocessors. The company represents the main competition for Intel.
Other companies that may be interested include ARM licensees Samsung, TSMC and Qualcomm.
However, a takeover by a licensee may endanger ARM's pioneering intellectual property licensing business model that has enabled the firm to dominate the market for mobile microprocessor technology and become the most potent challenger to Intel.
ARM CEO Simon Segars said: "We weren't looking to sell the company because we believe our standalone prospects are really compelling. So when SoftBank approached us with an interesting and intriguing proposition, it was something that we had to look at."
He added that SoftBank offered a stack of cash that could scarcely be turned down, but also "a future that is more exciting than we could achieve on our own".
"At £17 a share, the board believes this really fairly values the company and, in terms of the future, ARM and SoftBank share a vision of the way that technology is going to change people's lives and enable communication and collaboration around the world," said Segars.
He added: "With SoftBank's backing, and the level of investment that they can make into the business, we believe we will be able to achieve more than we could standing on our own. Together, this deal is a very interesting, fascinating offer to enable the next chapter of growth for ARM."
ARM was formed as spin-off from home computer pioneer Acorn in 1990. It was originally called Acorn Risc Machines before changing its name to Advanced Risc Machines, then simply ARM. The company's first CEO, Robin Saxby, focused the company on intellectual property licensing rather than producing hardware.
The approach cut costs for licensees and ARM, and the company was well placed to take advantage.
In the early days, ARM competed primarily with MIPS and Hitachi in providing relatively powerful microprocessors for mobile and embedded applications that were also power efficient.
The combination of product and business model enabled the company to put together hundreds of licensees who could customise the designs according to their needs, making ARM the chip designer of choice for many mobile, embedded and IoT applications.
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