There was quite a bit of resistance to the notion of the Japanese giant Softbank acquiring one of Europe’s largest technology companies in a deal worth $32bn.
However, notion turned to fact towards the end of 2016 when the deal to buy ARM holdings was finalised much to the disappointment of many in the industry. Unlike the governments in countries like Germany and France, the UK Government seemed quite happy to allow the sale of a key part of UK industry and waved the acquisition through.
Since the purchase, there have been rumours that Softbank itself was heavily in debt and would sell a stake in ARM to raise cash – 25% was a popular figure at the time. To date, that particular sale never went ahead but now it is reported that Softbank could relist ARM in an IPO but the company states this is several years away. If at all.
Since the takeover, ARM has uncharacteristically posted sizeable losses which, for most companies, would be quite alarming. However, looking at developments at the company in the last 18 months, it is easy to understand how profit has turned to loss in a short space of time. And it’s not all bad news.
One of Softbank’s pre-acquisition commitments was to invest in the UK and grow the company globally. That seems to have happened. It’s on record that ARM has added hundreds of qualified people both in the UK and overseas which has set the foundation for future growth. Despite the negative press that Softbank seems to attract, it does have a proven record of pursuing growth over short-term profit which is a trait not uncommon in Japan.
Given the sectors where ARM is most active and given the growth potential of most of them, it is easy to see why Softbank did the deal. And so far, the new owners have kept their end of the bargain. Let’s hope it all works out.
Talking of ARM
ARM and a fellow Cambridge company PragmatIC are collaborating on the development of ‘smart’ packaging materials for a number of sectors including retail and pharmaceutical. According to a spokesman for the duo, the smart packaging sector could be worth nearly $8bn within just three years.
At the core of the development is PragmatIC’s own flexible chips which the company calls FlexICs and you can be sure that once this technology takes off, the number of applications could be practically limitless. One application mentioned recently is ‘Smart-Wrap’, a cling film-like material that could be used to package products and alert shoppers to the product’s location via a customer’s smart phone.
To someone who seldom goes to a big store and never knows where anything is, it sounds like a great idea. It will be interesting to see how the necessary power and comms can be ‘printed’ onto ultra-thin plastic and the way things are going it will need to be recyclable plastic too.