5 hrs due- business finance essay

Introduction

The purpose of this report is to analyze the possible valuation of Japan's Softbank's acquisition of British ARM holdings ，use relevant valuation techniques to reasonably predict the discounted present value of Softbank and arm holdings ，it also evaluated the impact of the price on Softbank and arm holdings after the deal was announced.

background

Softbank is a diverse company with large scale operations. The company started off by being a distributor for personal computer software in 1981. Over the years, the company has evolved into dealing with internet technology, telecommunication, robotics, and media, among others. The company has been headed by its founder Masayoshi Son, who has also been the Chief Executive Officer. The founder is referred to as the Japanese Bill gates. Softbank has grown to be one of the public companies which is among the most valuable in the world.

Softbank in 2016 surprised the world by planning to acquire ARM holdings, a British designer of chips. The company planned the acquisition for about $31.4 billion, and this is considered as the largest purchase of a technology company based in Europe (Warren). Softbank was able to complete the transaction in just about two months. ARM holdings was acquired for approximately $31 billion and then delisted from London Stock Exchange.

Softbank’s acquisition can also be considered as one of the largest a Japanese company has ever done. ARM is a company famous for designing chips, which are later licensed to be used by companies such as Samsung and Apple. The chips designed by ARM are found in dominating tablets and phones. In the past year, ARM shipped about fifteen billion chips, half of which can be found in different mobile devices (Warren). The acquisition of ARM is expected to give Softbank leverage when it comes to boosting its plans for internet of things. The chips made by ARM have revolutionized computing all over the world. Softbank’s investment is therefore a long-term one.