ARMH Arm Holdings Plc ADS Each Representing 3 Ordinary Shares (MM)

By Rick Carew 

HONG KONG -- Japan's SoftBank Group Corp. has reached a more than $32 billion deal to buy U.K.-based chip-designer ARM Holdings PLC, marking a significant push for the Japanese telecommunications giant into the mobile internet, according to a person familiar with the situation.

The all-cash deal, which was confirmed by ARM on Monday morning, comes on the heels of SoftBank Chief Executive Masayoshi Son's decision to take back the reins of the company's investment strategy from his former deputy and designated successor, Nikesh Arora, who resigned in June.

SoftBank, an internet and telecommunications conglomerate that invests in online startups from India to China and owns mobile carriers in Japan and the U.S., has been raising cash in recent months to bolster its war chest and pay down debt. Big deals have included the sale of around $10 billion worth of shares in Chinese e-commerce giant Alibaba Group Holding Ltd. and the sale of its entire stake in Finnish game maker Supercell Oy to China's Tencent Holdings Ltd That deal valued Supercell at more than $10 billion. That deal valued Supercell at more than $10 billion, and is expected to bring in more than $7 billion for SoftBank.

The ARM deal also comes less than a month after the U.K.'s decision to leave the European Union pushed down the value of the pound, potentially making British companies much more attractive bargains for buyers from overseas. It could face increasingly strict scrutiny in the U.K.: New British Prime Minister Theresa May struck a noticeably cautious tone about foreign takeovers of leading U.K. companies in a speech last week just before taking office.

Cambridge, U.K.-based ARM, whose microchip designs dominate the global processor market for smartphones including Apple Inc.'s iPhone, boasts a strong portfolio of intellectual property for chips connecting mobile devices. While less vibrant demand for smartphones has weighed on ARM's recent results, SoftBank is betting that its technology will be crucial to connecting devices ranging from smartphones to automobiles and appliances, according to a person familiar with the matter.

Both companies' boards have agreed to the deal, according to the person familiar with the situation.

SoftBank also controls Sprint Corp. and has been cutting expenses to revive the No. 4 U.S. mobile carrier.

SoftBank started more than three decades ago as a software distributor and has undergone many metamorphoses since then. At one time, it owned a magazine publisher and operated trade shows. In the 2000s, Mr. Son used a series of acquisitions to turn SoftBank into one of Japan's three major telecommunications companies, and its Japanese mobile-phone operator remains the company's cash cow.

He added to his telecommunications holdings by taking a controlling stake in Sprint of the U.S., then veered into internet services with investments in Asian e-commerce companies and ride-sharing apps.

--Peter Landers in Tokyo contributed to this article.

Write to Rick Carew at rick.carew@wsj.com

(END) Dow Jones Newswires

July 18, 2016 02:48 ET (06:48 GMT)

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