In the largest ever investment from Asia into Britain and the largest tech acquisition in recent history — perhaps the second largest in tech history (after Dell-EMC; if you classify Time Warner-AOL deal as media, not tech) — SoftBank is to buy ARM for £24bn ($32bn) citing IoT as a driving reason for the acquisition and its inflated value. SoftBank’s founder and CEO Masayoshi Son said: “ARM will be an excellent strategic fit with the Softbank group as we invest to capture the very significant opportunities provided by the Internet of Things”.
If I’ve understood the numbers correctly, this deal is three times the size of HP’s (troubled) acquisition of Autonomy. ARM’s business is clearly valued based on its existing highly successful business in embedded processors for mobile where the company has reigned supreme, as much as its growing business in enterprise infrastructure (data centre technologies), and its plans and developments in the IoT (termed embedded intelligence).
It’s certainly not the first deal to acquire IoT technology. Deals quoting IoT this year have already included Cypress-Broadcom, Sony-Altair, Cisco-Jasper; but this single acquisition is twice as much as the industry spent on IoT M&A in 2015 (an estimated $15bn). I suspect it’s not the last of the big investments driven by IoT though — Imagination Technologies still has much to bring to this market and has been named as a takeover target on numerous occasions. It’s also the one remaining significant British acquisition target.
SoftBank’s bullish valuation and decision to invest in IoT should certainly reassure those investing in IoT startups. While the exact opportunities may be difficult to quantify, the optimism and appetite in the industry for IoT is now clear. With IDC quoting $1.7bn figures for the IoT market by 2020, it’s going to be difficult to ignore. Game on.
As Richard says, let’s just please try to ensure British tech companies capitalise on this opportunity.