Japanese internet and telecommunications conglomerate SoftBank Group Corp. is buying the U.K.-based designer of the microprocessors that power more than 95% of the world’s smartphones, in a $32 billion deal that caught the chip industry by surprise.
The deal for ARM Holdings PLC came together in a flurry of negotiations over just two weeks, said ARM Chief Executive Simon Segars. It is SoftBank’s largest-ever investment, according to data from Dealogic.
SoftBank Chief Executive Masayoshi Son said Monday the acquisition marks a “paradigm shift” at the company to invest in the Internet of Things, as he bets on demand for internet connectivity across everyday devices as diverse as automobiles and refrigerators. Mr. Son recently took back the reins of the company’s investment strategy from his former deputy and designated successor, Nikesh Arora, who resigned in June.
Mr. Son also said the ARM deal reflects his confidence that the fortunes of unprofitable U.S. wireless carrier Sprint Corp., which SoftBank bought in 2013, were turning around. SoftBank has been cutting expenses to revive the No. 4 U.S. mobile carrier.
The U.K. government hailed the deal—the largest takeover of a British company by an Asian company—as a sign of confidence in the country after Britons voted last month to leave the European Union.
Mr. Segars, who said ARM wasn’t soliciting bids, was initially skeptical when the SoftBank board made its formal offer two weeks ago. “We always thought of ourselves as an independent company,” he said.
He said SoftBank’s Mr. Son assured him that ARM would continue to operate as it does today. “There’s no intention for SoftBank to change our culture, our team,” Mr. Segars said.
Mr. Segars added that he gathered his employees in the atrium of ARM’s Cambridge, England, headquarters Monday and told them that the acquisition would allow the company to grow. ARM has about 4,000 employees, with 1,600 based in Britain. SoftBank said it planned to double the size of the U.K. team over the next five years.