SoftBank Group (“SoftBank”) (OTC: SFTBY) and ARM Holdings plc (“ARM”) (NASDAQ: ARMH) have announced agreement on the terms of a recommended acquisition by SoftBank of the entire issued and to be issued share capital of ARM for cash. The acquisition may be executed by SoftBank, or, at Softbank’s election, a wholly-owned subsidiary of SoftBank.
Under the acquisition agreement, each ARM shareholder will be offered 1,700 pence (UK) in cash for each share held. The offer price of 1,700 pence corresponds to an acquisition premium of about 43.0 percent to ARM’s closing price, on Friday, July 15, 2016, of 1,189 pence. ARM ADRs were trading at $47.08 on Friday, July 15, 2016. After the acquisition announcement, they rose to $67.18. The offer price also represents a 69.3 percent premium on the ARM volume-weighted average closing price, over the three months to July 16, 2016, of 1,004 pence and a 58.7 percent premium on the ARM ADR volume-weighted average closing price, over the three months to July 16, 2016, of $42.39. In addition, the offer price is at a premium of about 41.1 percent to ARM’s highest ever-closing price of 1,205 pence on March 16, 2015.
The proposed consideration values the entire existing issued and to be issued share capital of ARM at, roughly, £24.3 billion ($32 billion).
ARM shareholders on the Register of Members up to September 8, 2016, or at the end of the business day before the Effective Date will be eligible for an interim dividend of 3.78 pence per ARM Share, which dividend will be paid on October 10, 2016, or the Effective Date, if earlier. Such payment will not affect the offer consideration due under the Acquisition. ARM members on the Register will continue to be eligible for Ordinary Course Dividends, i.e., those with a record date prior to the Effective Date.
Members on the Register at the close of business on April 20, 2017, the record day for the 2016 final dividend, will be entitled to the 2016 final dividend for the financial year to December 31, 2016, of up to 6.76 pence per ARM Share, which is expected to be paid on May 11, 2017. However, members will not be entitled to receive any Ordinary Course Dividends if the Effective Date occurs before the record date of such appropriation.
SoftBank may reduce the offer consideration by an amount equal to any dividend or distribution or return of capital, other than the interim and final dividends above, announced, declared or paid, in respect of ARM shares.
SoftBank has announced its intention to maintain the headquarters of ARM in Cambridge and to continue with the existing organizational structure, senior management, branding, partnership-based business model and culture. SoftBank also plans to, at a minimum, double employee headcount in the UK over the next five years to enable ARM to continue developing its leading-edge technology in the UK and increase the headcount of ARM outside the UK over the next five years.
The Acquisition is to be executed under Part 26, Arrangements and Reconstructions, of the Companies Act 2006.
For more information, visit www.softbank.jp/en
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