The Japanese telecommunications provider Softbank wants to take over the British chip designer ARM. This was announced by both companies in a joint statement. ARM expressly recommends that its shareholders approve this offer. The purchase price is 24.3 billion pounds, i.e. around 29 billion euros. This would be around 43% higher than the last stock market value on July 15. ARM shares jumped 41% to 20.38 euros today following the announcement of the planned takeover. Around 2/3 of the purchase is to be financed by loans; Softbank currently has loans with a volume of more than 1000 billion dollars on its balance sheet.

It would not only be the first giant takeover of a British company since the Brexit referendum, which has driven the pound sterling exchange rate into the basement (the yen has gained around 30% against the pound compared to the previous year), but would also have a significant impact on the semiconductor market.

CPUs and other IP (e.g. switching matrices, GPUs, more recently radios) are not only the de facto standard for microcontrollers, but also for MPUs and application processors in smartphones and tablets. Cortex-M and -R CPUs can also be found in many ASICs, for example in modems. Apple, Qualcomm and Samsung build their own products on architecture licenses from ARM, which allows them to modify the IP themselves.

Apple, for example, has been designing its own chips for its iPhones and iPads for years - but they are also based on ARM technology. There is also speculation that the company could also convert its Mac computers from the Intel processors currently in use to ARM architecture.

ARM recently announced new processors for the automotive industry (ARMv8-R) and the IoT (ARMv8-M). The latter could be of particular interest to Softbank as telecom companies around the world seek to reinvent themselves as service providers for connected devices of all kinds. Analysts expect Softbank to increase license fees across the board. Given the current dependence of licensees, they will have little choice but to grudgingly pay up. The alternative is to be left behind technologically by the competition, which uses the latest ARM-IP.

The company headquarters are to remain in Cambridge and 1,500 new jobs are to be created there over the next 5 years, which would represent a doubling of the workforce. New jobs are also to be created outside England, although the specific number was not mentioned. ARM's top management is also to remain on board for the time being. However, all agreements are only valid for the next 5 years, after which it is unclear what will happen.

The ARM board itself - with company founder Mike Muller at the helm - holds a significant number of shares, which would add millions to the account: Muller himself holds 1,236,000 shares (currently worth just under 25 million euros) and CEO Simon Segars holds 668,432 shares (currently worth just under 13.5 million euros).

Softbank operates mobile networks in Japan and the USA. In recent months, Softbank sold shares to the Chinese internet group Alibaba, raising ten billion US dollars. Shares in the Finnish games manufacturer Supercell Oy were also sold to Tencent from China. Softbank is therefore likely to raise over seven billion US dollars. Softbank also controls Sprint, the fourth-largest mobile operator in the USA.

The deal seemed to be so close to Softbank's CEO Masayoshi Son's heart that he recently postponed his retirement and even accepted that his designated successor, ex-Google manager Nikesh Arora, would leave overnight.

ARM's business model limits the scope for Son if it does not want to scare away customers: "We have been completely independent since our IPO - and that is something our partners value," ARM's CEO Simon Segars told the financial service Bloomberg after the deal was announced.

The purchase could also worsen ARM's business prospects in China, warned analyst Roger Sheng from market research firm Gartner. "The Chinese government has some political problems with the Japanese government. So if ARM is bought by Softbank, I think China will invest more in developing its own architecture," Sheng told Bloomberg.