7 ms·

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 t

by ktamura 10y ago

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.

adamnemecek 10y ago
This makes me wonder when did the acquisition talks begin.
adventured 10y ago
Even more so when you look at the Yen vs GBP in particular. The Yen is up ~40% against the GBP in the last year.
hendzen 10y ago
FYI, much of ARM is held via ADRs (American Depositary Receipts) denominated in USD. This is how ARM shares trade on NASDAQ (under the ticker ARMH) in addition to trading on LSE.
CyberDildonics 10y ago
Don't forget a stronger yen which could face enormous volatility in the future.
hkmurakami 10y ago
Since ARM had been a mainstream acquisition target for years now, I'd suspect this owes more to their M&A team rather than their CEO. Estimating ARM's future earnings is relatively straightforward, and Softbank, like Berkshire, loves free cash flow. It doesn't require a visionary to go through the calculus of an acquisition under these parameters; it requires a team of shrewd finance professionals.
- jldugger 10y ago
  Intel doesn't exactly shy away from purchases either; is it likely that the only reason they haven't made an offer anti-trust regulations?
  - frik 10y ago
    Wouldn't be allowed, right? That would position Intel as absolute monopolist on desktop, server and mobile CPU. Intel CPU cost already way to much due to lacking competition from the only left x64 vendor AMD which is years behind. And Intel slowed down the release of faster CPUs. Where are the 8 and 16 core CPUs? Where are the 5+ GHz CPUs? Why hasn't the single core performance advanced that much (if you discount the advance of memory speed) since 2004 (Pentium 4 era).
    - mandeepj 10y ago
      10 core is coming - http://www.intel.com/content/www/us/en/processors/core/core-i7ee-processor.html http://www.intel.com/content/www/us/en/processors/core/core-...
      - eatbitseveryday 10y ago
        Intel already sells 18-core processors, granted they are server chips, not desktop chips.
        mandeepj 10y ago
        Thanks. AMD is coming with 32 cores - http://www.extremetech.com/extreme/222921-amd-is-supposedly-planning-a-32-core-cpu-with-an-eight-channel-ddr4-interface http://www.extremetech.com/extreme/222921-amd-is-supposedly-...
        eatbitseveryday 10y ago
        48-core ARM processors already exist[1] but via the vendor Cavium. The takeaway is that multi-core is continuing very much so. edit: I just looked; Intel has Haswell-based server processors with 24 physical cores[2] [1] http://www.cavium.com/newsevents_Cavium_Introduces_ThunderX_A_2.5_GHz_48_Core_Family_of_Workload_Optimized_Processors_for_Next_Generation_Data_Center_and_Cloud_Applications.html http://www.cavium.com/newsevents_Cavium_Introduces_ThunderX_... [2] http://ark.intel.com/products/93790/Intel-Xeon-Processor-E7-8890-v4-60M-Cache-2_20-GHz http://ark.intel.com/products/93790/Intel-Xeon-Processor-E7-...
- deleted 10y ago
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suvelx 10y ago
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
- justincormack 10y ago
  The BBC it was done in two weeks.
  - tsukikage 10y ago
    Wanted to mention this elsewhere but can't find a reference, do you have one?
    - corford 10y ago
      FT says three weeks: https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a590a https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a...
      - tsukikage 10y ago
        Paywall :( But thanks!
- lordnacho 10y ago
  It's quite possible to do these deals in short time. For one, the young investment bankers and lawyers are accustomed to staying up late when there's a deal on. I used to live with one, and it was simply part of the job that the job was everything, all the time. Staying up an unhealthy amount is what they expect. Also, this isn't a completely out-of-the-blue deal. Everyone in the M&A space would have given some thought as to which firms would potentially merge, and they would have made presentations to the bosses of the involved firms airing the pros and cons, the possible financials, the antitrust side, and various other issues.
- numbsafari 10y ago
  It seems like SoftBank is very willing to do deals with very little due diligence (based on some, uh, experience). In this case, at this size, my guess is they've been keeping tabs on ARM for a long time and maybe decided to just pull the trigger with Brexit going on.
Peroni 10y ago
Brexit didn't make ARM cheaper. On referendum day it was 1567 yen/share. On Friday was 1670 yen. https://twitter.com/jamestitcomb/status/754966707769315333 https://twitter.com/jamestitcomb/status/754966707769315333
- pbhjpbhj 10y ago
  The referendum was announced in early Feb 2016 and markets started to move then, http://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1M http://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1M. See that step that looks like the half-profile of Table Mountain, that's referendum day.
  - infinity0 10y ago
    Yes but ARM shares are up since Brexit, more than offsetting the GBP loss.
  - jsingleton 10y ago
    It looks like that although the GBP has declined against the Yen over the last year (and dramatically since the EU vote) [1], ARM's share price has increased to more than counteract this (again dramatically since the EU vote) [2]. [1]: http://www.bbc.co.uk/news/business/market_data/currency/11/14/twelve_month.stm http://www.bbc.co.uk/news/business/market_data/currency/11/1... [2]: http://www.bbc.co.uk/news/business/market_data/shares/3/87294/twelve_month.stm http://www.bbc.co.uk/news/business/market_data/shares/3/8729...
deleted 10y ago
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fulafel 10y ago
Value of ARM should stay the same when GBP goes down (as viewed in yen or USD) since it's selling to the global market. Or maybe go up since ARM's UK expenses are now lower. It's the pound that's depreciating, not ARM.
- simonh 10y ago
  Good point, ARM's revenue in the form of licensing fees and royalties is denominated in Dollars.
runeks 10y ago
> He's taking advantage of the weak GBP thanks to the whole Brexit fiasco. More likely: SoftBank Group is taking advantage of its ability to issue debt at historically low interest rates, thanks to the monetary policy of the Bank of Japan. SoftBank's net-debt-to-equity ratio has risen from 0.6 to 3.5 from FY2011 to 2015: http://www.softbank.jp/en/corp/irinfo/financials/results/highlights/ http://www.softbank.jp/en/corp/irinfo/financials/results/hig.... That being said, SoftBank purchased ARM using GBP (I assume), so they would need a way to convert their cheaply acquired JPY to GBP. I wonder if they are able to purchase foreign companies for JPY at, say, a 10% markup. The sellers would be able to sell this JPY on the market as soon as they receive it, and SoftCorp would be left with a brand new company in its portfolio and some JPY liabilities (they are issuing unsecured, subordinated (5-year?) JPY bonds at 2.5% p.a.: http://www.softbank.jp/en/corp/irinfo/stock/bond/ http://www.softbank.jp/en/corp/irinfo/stock/bond/).

by ktamura 10y ago

adamnemecek 10y ago

This makes me wonder when did the acquisition talks begin.

adventured 10y ago

Even more so when you look at the Yen vs GBP in particular. The Yen is up ~40% against the GBP in the last year.

hendzen 10y ago

FYI, much of ARM is held via ADRs (American Depositary Receipts) denominated in USD. This is how ARM shares trade on NASDAQ (under the ticker ARMH) in addition to trading on LSE.

CyberDildonics 10y ago

Don't forget a stronger yen which could face enormous volatility in the future.

hkmurakami 10y ago

Since ARM had been a mainstream acquisition target for years now, I'd suspect this owes more to their M&A team rather than their CEO. Estimating ARM's future earnings is relatively straightforward, and Softbank, like Berkshire, loves free cash flow. It doesn't require a visionary to go through the calculus of an acquisition under these parameters; it requires a team of shrewd finance professionals.

jldugger 10y ago
Intel doesn't exactly shy away from purchases either; is it likely that the only reason they haven't made an offer anti-trust regulations?
- frik 10y ago
  Wouldn't be allowed, right? That would position Intel as absolute monopolist on desktop, server and mobile CPU. Intel CPU cost already way to much due to lacking competition from the only left x64 vendor AMD which is years behind. And Intel slowed down the release of faster CPUs. Where are the 8 and 16 core CPUs? Where are the 5+ GHz CPUs? Why hasn't the single core performance advanced that much (if you discount the advance of memory speed) since 2004 (Pentium 4 era).
  - mandeepj 10y ago
    10 core is coming - http://www.intel.com/content/www/us/en/processors/core/core-i7ee-processor.html http://www.intel.com/content/www/us/en/processors/core/core-...
    - eatbitseveryday 10y ago
      Intel already sells 18-core processors, granted they are server chips, not desktop chips.
      - mandeepj 10y ago
        Thanks. AMD is coming with 32 cores - http://www.extremetech.com/extreme/222921-amd-is-supposedly-planning-a-32-core-cpu-with-an-eight-channel-ddr4-interface http://www.extremetech.com/extreme/222921-amd-is-supposedly-...
        eatbitseveryday 10y ago
        48-core ARM processors already exist[1] but via the vendor Cavium. The takeaway is that multi-core is continuing very much so. edit: I just looked; Intel has Haswell-based server processors with 24 physical cores[2] [1] http://www.cavium.com/newsevents_Cavium_Introduces_ThunderX_A_2.5_GHz_48_Core_Family_of_Workload_Optimized_Processors_for_Next_Generation_Data_Center_and_Cloud_Applications.html http://www.cavium.com/newsevents_Cavium_Introduces_ThunderX_... [2] http://ark.intel.com/products/93790/Intel-Xeon-Processor-E7-8890-v4-60M-Cache-2_20-GHz http://ark.intel.com/products/93790/Intel-Xeon-Processor-E7-...
deleted 10y ago
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deleted 10y ago

[deleted]

suvelx 10y ago

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

justincormack 10y ago
The BBC it was done in two weeks.
- tsukikage 10y ago
  Wanted to mention this elsewhere but can't find a reference, do you have one?
  - corford 10y ago
    FT says three weeks: https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a590a https://next.ft.com/content/a0e0134c-4d08-11e6-88c5-db83e98a...
    - tsukikage 10y ago
      Paywall :( But thanks!
lordnacho 10y ago
It's quite possible to do these deals in short time. For one, the young investment bankers and lawyers are accustomed to staying up late when there's a deal on. I used to live with one, and it was simply part of the job that the job was everything, all the time. Staying up an unhealthy amount is what they expect. Also, this isn't a completely out-of-the-blue deal. Everyone in the M&A space would have given some thought as to which firms would potentially merge, and they would have made presentations to the bosses of the involved firms airing the pros and cons, the possible financials, the antitrust side, and various other issues.
numbsafari 10y ago
It seems like SoftBank is very willing to do deals with very little due diligence (based on some, uh, experience). In this case, at this size, my guess is they've been keeping tabs on ARM for a long time and maybe decided to just pull the trigger with Brexit going on.

Peroni 10y ago

Brexit didn't make ARM cheaper. On referendum day it was 1567 yen/share. On Friday was 1670 yen. https://twitter.com/jamestitcomb/status/754966707769315333 https://twitter.com/jamestitcomb/status/754966707769315333

pbhjpbhj 10y ago
The referendum was announced in early Feb 2016 and markets started to move then, http://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1M http://www.xe.com/currencycharts/?from=JPY&to=GBP&view=1M. See that step that looks like the half-profile of Table Mountain, that's referendum day.
- infinity0 10y ago
  Yes but ARM shares are up since Brexit, more than offsetting the GBP loss.
- jsingleton 10y ago
  It looks like that although the GBP has declined against the Yen over the last year (and dramatically since the EU vote) [1], ARM's share price has increased to more than counteract this (again dramatically since the EU vote) [2]. [1]: http://www.bbc.co.uk/news/business/market_data/currency/11/14/twelve_month.stm http://www.bbc.co.uk/news/business/market_data/currency/11/1... [2]: http://www.bbc.co.uk/news/business/market_data/shares/3/87294/twelve_month.stm http://www.bbc.co.uk/news/business/market_data/shares/3/8729...

deleted 10y ago

[deleted]

fulafel 10y ago

Value of ARM should stay the same when GBP goes down (as viewed in yen or USD) since it's selling to the global market. Or maybe go up since ARM's UK expenses are now lower. It's the pound that's depreciating, not ARM.

simonh 10y ago
Good point, ARM's revenue in the form of licensing fees and royalties is denominated in Dollars.

runeks 10y ago

> He's taking advantage of the weak GBP thanks to the whole Brexit fiasco. More likely: SoftBank Group is taking advantage of its ability to issue debt at historically low interest rates, thanks to the monetary policy of the Bank of Japan. SoftBank's net-debt-to-equity ratio has risen from 0.6 to 3.5 from FY2011 to 2015: http://www.softbank.jp/en/corp/irinfo/financials/results/highlights/ http://www.softbank.jp/en/corp/irinfo/financials/results/hig.... That being said, SoftBank purchased ARM using GBP (I assume), so they would need a way to convert their cheaply acquired JPY to GBP. I wonder if they are able to purchase foreign companies for JPY at, say, a 10% markup. The sellers would be able to sell this JPY on the market as soon as they receive it, and SoftCorp would be left with a brand new company in its portfolio and some JPY liabilities (they are issuing unsecured, subordinated (5-year?) JPY bonds at 2.5% p.a.: http://www.softbank.jp/en/corp/irinfo/stock/bond/ http://www.softbank.jp/en/corp/irinfo/stock/bond/).