Why Is ARM Holdings (ARMH) Up 42% Today?

Arm Holdings ARMH opened up 42% on Monday on the announcement that it is to be acquired by the Japanese tech/telecoms company SoftBank SFTBY.

Based in Cambridge, UK, ARM designs microprocessors, physical intellectual property, and related technology and software. Notably, the company makes designs that are used by Apple AAPL and Samsung, amongst others.

SoftBank agreed to pay £24.3 billion ($32.1 billion) for ARM, which had a market cap of $22 billion before the deal. Softbank plans on “preserving the ARM organization, including ARM’s existing senior management team, brand, partnership-based business model and culture” as per their official announcement.

SoftBank has been eyeing ARM for some time now, but a post-Brexit pound that is down 12% against the Japanese Yen may have served as a catalyst, although SoftBank claims the timing of the deal has nothing to do with that.

Along with their newest acquisition, SoftBank owns U.S. based Sprint S, has stakes in China’s Alibaba BABA and Yahoo Japan, and recently sold their stake in Supercell to Tencent TCEHY for $10.2 billion.

ARM has been in decline due to stagnating smartphone sales, of which the iPhone has noticed a notable decrease. Although ARM’s earnings have decreased in the short-term, it is still a key player moving forward in the “Internet of Things” (IoT) market, which our team discussed here.

ARM Holdings currently sits at a Zacks Rank #4 (Sell).

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