Assured Trading: Shares in Japanese internet and telecommunications conglomerate, Softbank, tumbled as investors tried to find rationale for its $32bn acquisition of UK semiconductor chip designer, ARM Holdings. It was the first time that investors had been able to react to the announcement as Japan’s markets were closed for a holiday on the day of the announcement.
Softbank will pay £17.00 per share of ARM Holdings which is the UK’s biggest technology company by market value. The company designs semiconductors
“Investors are having difficulty understanding how the semiconductor business fits in with Softbank’s current operations which are firmly embedded in internet and telecommunications as evidenced by its significant stakes in Chinese Internet giant, Alibaba and US telecoms provider, Sprint,” said Haru Tanaka, who leads technology research at Assured Trading.
Additional investor concerns center on the price Softbank is paying to acquire ARM. The offer is a 43% premium on ARM’s closing price at the end of last week on the FTSE. There are also worries about how it plans to turn the fortunes of Sprint, the US’s 4th largest mobile carrier and the debt overhang from its acquisition of the company in 2013.
Assured Trading says it believes the deal is sound but agrees that Softbank paid more than it should have. “The fact that ARM’s chips feature in the devices of Apple, Samsung and others notwithstanding, the future of the internet lies in the Internet of Things (IoT) and ARM is way ahead of rivals like Intel in this regard,” said Tanaka.

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