
SoftBank Group Nears Deal to Buy ARM Holdings - anyfoo
http://www.nytimes.com/2016/07/18/business/dealbook/softbank-group-nears-deal-to-buy-arm-holdings.html?_r=0
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ktamura
This is the opportunistic genius of Masayoshi "Masa" Son as one of the most
successful technology investors of our time. He's taking advantage of the weak
GBP thanks to the whole Brexit fiasco. As a major carrier in Japan and an
owner of Sprint, this move makes total sense.

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suvelx
You think the deal was started, and nearly completed in a few weeks? Surely
the deal had been going on for a while longer than brexit turmoil

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justincormack
The BBC it was done in two weeks.

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tsukikage
Wanted to mention this elsewhere but can't find a reference, do you have one?

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corford
FT says three weeks:
[https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a...](https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a590a)

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tsukikage
Paywall :( But thanks!

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jimmytidey
Apparently Arm's Founder isn't particularly into it:

"ARM is the proudest achievement of my life. The proposed sale to SoftBank is
a sad day for me and for technology in Britain."

[https://twitter.com/hermannhauser/status/755008815553273858](https://twitter.com/hermannhauser/status/755008815553273858)

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nashashmi
I once read an article where the CEO of ARM reasoned against raising prices
because its partners would then have less healthy businesses. I never forgot
that piece of wisdom.

But now with this acquisition, is there any room for such generous mentality?

~~~
venomsnake
It is not generosity. It is knowledge of your own business model.

ARM wants to earn 1penny on every chip sold, but to put chips everywhere. So
increasing royalties, but preventing market expansion is bad. Especially with
the internet of appliances rapidly approaching.

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dingo_bat
I'm curious. Does ARM get royalties even on custom designed chips like
apple's? Or only on reference cores?

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masklinn
> Does ARM get royalties even on custom designed chips like apple's?

Designing custom cores requires holding an _architecture license_ which is
ARM's highest-level license (beyond the perpetual multi-use — use a core in
any product indefinitely — and the subscription — use any ARM product for a
set duration). There are about a dozen architecture license holders.

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dbcooper
The FT claims that the deal has been done for £23.4bn.

[https://next.ft.com/content/0cc23483-7681-3018-8e9d-80c2dd77...](https://next.ft.com/content/0cc23483-7681-3018-8e9d-80c2dd77fbda)

>Japan’s SoftBank has agreed to acquire Arm Holdings, the UK’s preeminent
technology company, for £23.4bn in an enormous bet by the Japanese telecoms
group that the smartphone chip designer will make it a leader in one of the
next big tech markets, the internet of things.

Apparently that is a 40% premium on market cap. [1]

[1]
[http://www.bbc.com/news/business-36822272](http://www.bbc.com/news/business-36822272)

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voltagex_
Does anyone know how (if) currency conversion is done with amounts this large?
I imagine with the volatility of the GBP right now this could have been more
expensive if the conversion was done a few weeks ago.

~~~
akiselev
It's more likely that currency con version at this scale will be largely on
paper accounting because 10s of billions of pound sterling is probably more
than most foreign currency reserves of countries much bigger than SoftBank
usually carry.

For example, a SoftBank subsidiary can probably take out huge loans from
UK/international institutions and collateral/pay the loan with other assets in
other jurisdictions. I believe this is how many companies avoid repatriation
taxes: by taking out a loan in the US and making the payments to financial
institutions overseas.

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pavlov
Maybe this explains why SoftBank recently chose to sell its controlling stake
of Supercell for about $7.3B USD -- they needed the cash for something bigger.

SoftBank had purchased Supercell for about $2B only a few years ago, so it was
a genius investment. Will be interesting to see if they can turn ARM into
another one of those.

~~~
obmelvin
I did wonder why they would sell their Supercell stake considering they just
introduced a new game which is looking to be another cash cow. This certainly
does seem to put the sale into some perspective.

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hrrsn
Uhh, what did they just introduce?

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wastedhours
Clash Royale - one of the top grossing games of the past few months.

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mrlambchop
Mixed feelings on this - huge congrats to ARM friends but I feel it's 1 act
too short for an exit like this. I'd love to have seen a British owned tech
company higher up the Global 2000 before transferring ownership.

~~~
chrisseaton
Yes I too wish that there was a big British tech company I could work for in
the UK (being British myself). Unfortunately I can't imagine ARM ever being
competitive as an employer.

When I was applying for internships during my degree a couple of years ago I
looked at US companies like Google and Oracle and ARM in the UK. I think ARM
paid about a quarter of what Google and Oracle were offering. One quarter. And
that's just cash before I included the housing, car costs and massive
relocation grant that the US companies included and ARM didn't.

Today Glassdoor tells me that ARM pays interns about half, and graduates about
60%, of what Microsoft does, in the same city (Cambridge) a few miles apart.

But they have good people working for them so it must be enough I guess!

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steton
A decade or so ago, ARM was offering graduates about £25K. I believe they
still offer the inflation-adjusted equivalent of that: ~£32K.

Does this mean that Microsoft Cambridge are offering graduates ~£50K? It's
interesting that I consider that to be very high for a graduate salary yet, at
USD 66K equivalent, it is significantly less than would be available in an
area of the USA with a comparable cost of living...

~~~
chrisseaton
Glassdoor says £70k to £90k for the same grade ('senior' but of course it's
hard to compare).

That's about what I would expect. This is for PhD interns and grads I should
have made more clear.

I'd say £32k is beyond taking the piss for someone with a CS undergraduate
degree and having to live in Cambridge (you couldn't buy a house there on
that) but if they're getting the people they want then it must be right for
them.

~~~
gchadwick
>I'd say £32k is beyond taking the piss for someone with a CS undergraduate
degree and having to live in Cambridge

Whilst it's not giant it's not super low either. I'd be surprised if you could
find that many tech (that is not banking/consultancy) companies in Cambridge
(or indeed London) offering signficantly more than that. There's also things
like Bonus, Share Scheme and pension (private health insurance too but that's
a pretty common perk) that needs to be brought in the comparison.

~~~
chrisseaton
Don't Facebook and Google offer more than that in London to new graduates with
just undergraduate degrees? I know those are outliers then, but it's a shame
that the outliers are all US companies. And ARM isn't just some tech agency,
they're working on hardware, simulation, compilers, etc, hard tech stuff.

~~~
gchadwick
I'm sure FB and Google offer more but they're not most tech companies!

London is also more expensive than Cambridge (I doubt you'll buy a house a
short distance from the office in London on a mid-level engineers salary at
Google/Facebook, you can happily do that in Cambridge at ARM).

I'd also note hard-tech stuff just seems to attract less money than web/social
(see how the recent linked-in acquisition by MS wasn't for much less cash than
the Softbank ARM deal).

I'm not saying ARM is super generous with their compensation compare to other
tech giants, but you get a pretty reasonable deal, and it's a nice place work
with interesting things to work on.

(I work at ARM)

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jhou2
I was surprised ARM hasn't been bought by a larger conglomerate yet. SoftBank
is way ahead of the game.

~~~
cstross
The problem with ARM is that the most likely suitors don't dare buy them -- if
Intel, Apple, Microsoft, or Google bought ARM Holdings, the others (all
rivals) would start looking for an alternative architecture to run on and the
licensing fees would take a nose dive.

It's one thing to license an architecture from an independent, scrupulously
neutral third party: another entirely to gamble your business platform's
future on a rival's goodwill.

Softbank isn't an obvious direct platform-level competitor for Intel or Apple
or Samsung or the others, so may be an acceptable acquisitor who won't
frighten ARM's licensees into abandoning ship.

~~~
onion2k
That assumes someone would buy them as an ongoing business. Apple could have
bought them specifically in order bring the ARM designers in to Apple and
force their rivals to switch - an acquihire on a massive scale. Using an ARM
designed chip is an advantage, and taking that advantage away from your
competition could be a very good thing for your business.

I'm glad that didn't happen though.

~~~
rwmj
Apple completely design their own chips. The real mystery is why Apple stuck
with the ARM architecture when they switched to 64 bit (since aarch64 is a
brand new design). My guess is because they still had to license the 32 bit
architecture for compatibility, and because the amount that Apple pays to ARM
each year for the license is peanuts.

~~~
mtgx
For the same reason they haven't switched to ARM for macOS yet -
compatibility. If Steve Jobs was still alive, he would've probably switched
macOS to ARM by now, despite all the hassle. He's done it before. I'm not
really seeing Tim Cook pull a move like that anytime soon.

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ZenoArrow
Maybe it's just me, but I see this as a foolish move. ARM was better suited to
being an independent company due to their licencing model. With the purchase
by SoftBank now there's greater incentive for licensees to move away from ARM.
I suspect we'll see much more investment in RISC-V as a result of this, which
would be a good thing for most of us, but a less good thing for ARM.

~~~
toyg
That depends on how Softbank manages the acquisition. If they keep the company
separate and just keep cashing in dividends, I don't see the problem. Softbank
afaik is also very much focused on the Japanese market only.

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plainOldText
Apparently, $32 billion is how much they'll pay for this deal. [1]

[1] [http://www.wsj.com/articles/softbank-agrees-to-buy-arm-
holdi...](http://www.wsj.com/articles/softbank-agrees-to-buy-arm-holdings-for-
more-than-32-billion-1468808434)

~~~
peterburkimsher
They bought Sprint before. It's costing them an ARM and a leg.

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tdicola
I'm kind of surprised Apple didn't swoop in and buy ARM long ago. I guess as
others mentioned that might mean all the Apple competitors using ARM chips
would flee and leave them with a lot less partners.

~~~
lostlogin
They seem happy to screw their suppliers right down instead and leave the risk
to them - the sapphire screens saga being an example.

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unexistance
I wonder what SoftBank can add to ARM technologically?

Obviously besides swimming in dollar

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elsen
They took 95% ownership of Aldebaran Robotic a while ago, and it's a huge
success in Japan. I'm no expert but isn't that building a vertical?

AFAIR the robots are running on Intel Atom, but well... embedded... ARM...
(not saying that's the only reason though)

~~~
unexistance
huh, that sounds cool, energy-efficient factory robots, sounds like something
the Japanese love

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ausjke
Isn't he already bankrupt due to the "wrong" acquisition of Sprint? This is
hard to believe. I did notice he was preparing cash for something(selling
Supercell, and Alibaba shares for cash), I thought those cash are used to
cover Sprint's losses. Gosh this is really, really hard to believe.

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mtgx
This could be great for RISC-V's prospects, especially if Softbank decides to
be more partial to which customers it gives the license, or if it increases
prices, and so on - basically anything Softbank might do in the future that
would piss customers off, could be a win for RISC-V.

Don't expect any major shakeup over the next 3 years though. Even if some
customers decided to drop ARM right now, it would still take 3+ years before
they come up with a strong RISC-V alternative. First, Android would have to
give RISC-V its blessing (support it), too, but Google is a member of the
RISC-V foundation, so I assume that's not an impossible task.

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jjawssd
SoftBank WiFi access points are the most user unfriendly on the planet. You
have to call them to be able to register to get online. And guess what? If you
are not a Japanese resident you can't get a Japanese phone number. And even
before registering the WiFi craps out 80% of the time within 60 seconds of
connecting, no matter where you are in Tokyo. I am extremely disappointed.
SoftBank will shake you down for all you are worth.

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anonbanker
Neat! now my company can no longer worry about FIVEEYES having control of the
spec, or the company that makes it. probably the best news of the year for me.

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Animats
First sentence: _" SoftBank is nearing a deal to acquire ARM Holdings, the
British semiconductor company, said two people briefed on the matter who asked
not to be named discussing private information."_

Editing standards at the Grey Lady have declined.

~~~
pritambaral
I find that sentence grammatically correct. What is it do you think editing
has missed?

Disclaimer: I'm not related to the BBC

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analog31
Maybe I'm not thinking straight because I'm up to my ears in ARM chips (my
cell phone, tablet, half a dozen homemade gizmos, etc.). And I know they don't
actually make the chips themselves, but GBP 2.2e+09 doesn't seem like a lot
for a technology that has so much influence.

Correction: 2.2e10, as noted. Now I _know_ I'm not thinking straight.

~~~
davidfrankl
It's 2.2e+10

