Arm Holdings opened up 42% on Monday on the announcement that it is to be acquired by the Japanese tech/telecoms company SoftBank (SFTBY - Free Report) .
Based in Cambridge, UK, ARM designs microprocessors, physical intellectual property, and related technology and software. Notably, the company makes designs that are used by Apple (AAPL - Free Report) and Samsung, amongst others.
SoftBank agreed to pay £24.3 billion ($32.1 billion) for ARM, which had a market cap of $22 billion before the deal. Softbank plans on “preserving the ARM organization, including ARM’s existing senior management team, brand, partnership-based business model and culture” as per their official announcement.
SoftBank has been eyeing ARM for some time now, but a post-Brexit pound that is down 12% against the Japanese Yen may have served as a catalyst, although SoftBank claims the timing of the deal has nothing to do with that.
Along with their newest acquisition, SoftBank owns U.S. based Sprint (S - Free Report) , has stakes in China’s Alibaba (BABA - Free Report) and Yahoo Japan, and recently sold their stake in Supercell to Tencent (TCEHY - Free Report) for $10.2 billion.
ARM has been in decline due to stagnating smartphone sales, of which the iPhone has noticed a notable decrease. Although ARM’s earnings have decreased in the short-term, it is still a key player moving forward in the “Internet of Things” (IoT) market, which our team discussed here.
ARM Holdings currently sits at a Zacks Rank #4 (Sell).
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