Dear MEL
Topic Readers,
ARM
Holdings in £24bn Japanese takeover deal
US$
32bil to buy a company. Is it expensive to buy a company at a price that is 70
times as much as the company’s net income, or with a 43% premium on the
recently traded price? Just your reference, a multiple of 70 times is as high
as the market value of Facebook, an already grownup IT giant.
Who is
buying a UK microchip company, ARM, at such a high price tag? That’s Softbank,
a Japanese IT infrastructure company led by Masayoshi Son that owns Sprint in
the U.S. It also invested and remains as a large shareholder of Yahoo and
Alibaba. Previously, it acquired Vodaphone’s Japan operation to become a mobile
phone carrier.
So why
is he buying the already successful chip company? Is that because of the fallen
UK pound? It’s because he expects that the company will grow much more for the next
decade as Industry of Things flourishes.
If so,
which is a wiser investment, $3.2bil to get 10% of the stake or $32bil for all?
Enjoy
reading and thinking what this bold investment is about.
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