19 July 2016 by lberuti
Japan woke up this morning to the tune of M&A after a three-day-week-end. Japanese telecom group SOFTBK ( SoftBank Group Corp ) is offering a 43% premium to Friday’s close to acquire ARM Holdings Plc , a UK mobile industry leader, for £24.3Bln. The bumper deal would be one of the largest European technology transactions and Softbank’s largest acquisition to date. ARM derives the vast majority of its revenues from Asia and North America with clients such as Apple, Samsung Electronics or Qualcomm, and should be relatively immune from Brexit. So the main impact of the coming UK’s exit from the EU at the moment is the roughly 12% fall of the British Pound against the Japanese Yen. It certainly makes the deal more attractive, but given the steady rise of ARM’s stock since the beginning of May and the hefty premium paid, the operation still means that SOFTBNK’s net debt to EBITDA could rise from 3.9 times to 4.6 times. No wonder investors pushed SOFTBNK’s 5 year risk premium 35bps wider to 155bps.