iPhone Chip Supplier ARM In £24bn Takeover Deal

The British company which designs microchips for iPhones is to be bought by Japanese conglomerate SoftBank in a £24.3bn deal.

The most valuable tech company listed in the UK, Cambridge-based ARM Holdings (LSE: ARM.L - news) supplies the technology for Apple (LSE: 0R2V.L - news) and Samsung mobile phones.

SoftBank is offering to pay £17 for every ARM share.

The board of ARM has recommended shareholders accept the offer - which represents a 43% premium on its closing market value of £16.8bn on Friday.

SoftBank has pledged to preserve ARM's existing management team, maintain its headquarters in Cambridge, at least double the number of employees in the UK over the next five years and increase its overseas workforce too.

ARM's shares opened up 45% this morning and closed 41% higher at the end of trading on the FTSE 100.

It (Other OTC: ITGL - news) is the tenth largest UK merger or acquisition ever, according to the Institute for Mergers, Acquisitions and Alliances.

Chancellor Philip Hammond welcomed the deal saying: "This £24bn investment would be the largest ever from Asia into the UK.

"It would … turn this great British company into a global phenomenon.

"Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors."

However ARM co-founder, Hermann Hauser who is now a partner at Amadeus Capital, said in a tweet that the deal represented a "sad day" for the UK's technology sector.

The agreement was announced following warnings the UK would not be able to attract overseas investment if it left the EU.

New Prime Minister Theresa May said when she launched her leadership bid that she was committed to "defending" British companies from foreign takeovers that are not in the national interest.

Experts have cautioned the takeover could lead to "brain drain" if ARM Holdings businesses were moved out of the UK.

Professor Mark Skilton, from Warwick Business School, warned: "The concern of brain drain and ARM business moving from the UK must be considered in this equation based on its know-how and leadership in chip design."

However, Stuart Chambers, ARM's chairman, said: "The board of ARM is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology.

"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."

Masayoshi Son, chairman and chief executive of SoftBank, said: "We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market-leader in its field.

"We invest to capture the very significant opportunities provided by the "Internet of Things".

"This investment also marks our strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent in Cambridge."

At a press conference this morning Mr Son he was not driven to invest in ARM because of Brexit.

"We did not use this as an opportunity to buy cheaper... Brexit did not bring us any discount, " he said.

In fact, ARM has seen its shareprice rise since the referendum and has not been greatly affected by the fall in the value of sterling.