Japan's SoftBank (SFTBY) will buy ARM Holdings (ARMH), a U.K. maker of wireless chip designs used by Apple (AAPL) and Samsung smartphones, for more than $32 billion, the companies confirmed early Monday.
SoftBank agreed to pay 24.3 billion pounds ($32.1 billion) cash for ARM Holdings. ARM had a market capitalization of $22 billion before the deal. ARM's U.S. shares shot up nearly 41% to 66.17 on the stock market today. SoftBank fell 7.8% to 26.22.
SoftBank pledged to maintain ARM's current management, to double its U.K. workforce and to expand its overseas headcount over the next five years.
SoftBank benefits from a stronger yen and cheaper pound in this deal. Since the U.K. voted to leave the European Union, the pound is down 12% vs. the Japanese yen. That makes it far cheaper for Softbank to buy ARM, but SoftBank said currency swings weren't a factor in the deal.
SoftBank also owns 85% of U.S. telecom Sprint (S). Sprint fell 5% as investors see a shift in resources to buying ARM that could have gone to the wireless operator.
SoftBank recently agreed to sell its 72% stake in Supercell, creator of mobile game "Clash of Clans," for $7.8 billion to China's Tencent Holdings (TCEHY).
IBD's TAKE: ARM Holdings is just one of many Apple chip suppliers. Skyworks Solutions (SWKS) reports on Thursday, but SWKS earnings are expected to fall for a sixth straight quarter. Skyworks stock has been in a downturn since June 2015, but it has recently retaken its declining 50-day line. Meanwhile, Qualcomm (QCOM) is expected to report a fifth straight EPS decline.
