Any thoughts out there as to the direction this will go? Having been hammered as it is deemed that they have bought at too higher price combined with a desire to buy out those in direct competition.

Any pearls will be welcome.

For you : press mention, will appear in tomorrow's Times Newspaper.

August 24, 2004

Tempus

Why ARM may not be overreaching itself with US adventure
By Robert Cole



STOCK MARKET investors blew a big raspberry in the direction of ARM, the computer chip designer, on news that it is about to buy Artisan, a US counterpart.
The objections are numerous. The price being paid strikes many observers as being fruity. The $913 million (505 million) is equivalent to about 11 times Artisans annual sales and 50 times its full-year post-tax profit. ARMs current value, although much reduced over the past five years, is enough to make most investors eyes water. But judged with reference to these benchmarks on a like-for-like basis, ARM is paying twice as much for Artisan.



Moreover the acquisition is, according to some, a sign that ARM fears that its existing business is running out of steam. It is the largest deal ever completed by the Cambridge-based technology company, which has pursued organic growth so far. The acquisition is fraught with risk, not least because of its size, but also because the target is in the US. History is littered with examples of UK companies that have foundered on the rocks of over-ambitious transatlantic expansion.

The deal will soak up some of ARMs cash. Admittedly, a greater part of the consideration will come through the issue of new ARM shares. But this has only led investors to worry that the market will be flooded with stock. The price could be especially hard hit if US investors in Artisan are unable or unwilling to hold shares in a UK company and dump the ARM shares that they receive as consideration if or when the acquisition is completed.

The other side of the story, meanwhile, is amorphous. Investors should be able to appreciate that ARM will benefit from the cross-selling opportunities. They will also understand that the combined group will have much enhanced research and development capabilities. They may also assume that the inclusion of two senior Artisan executives on a reformulated ARM board means that managers on both sides of the deal will work together to execute the integration successfully.

That said, the fact that ARM executives are willing to pay what looks a high price might indicate an inside view that the market undervalues their shares. At the same time, it is reasonable to assume that ARMs normally sensible senior executives led by Sir Robin Saxby, chairman will create value from the deal. Buy.

http://business.timesonline.co.uk/article/0,,8211-1229896_1,00.html

many thanks SueHelen

Not exactly blasting back, but up over 2% so far.

Overpaid and over there. This does not look like the deal of the year.

I have watched this stuff from the inside of companies. What starts out as an idea becomes a goal, then becomes a goal to pursued at all costs, as personal reputations become nailed to the execution of the deal. No real re-assessment goes on as the price goes up. This has all the hallmarks of such a situation. I respect ARM and their achievements, but not for this foolish deal. I have no position in ARM.

To that end, has Scudamore bought 55,0000 shares to save face and force a positive responce i wonder?

what must be worrying is the sale of stock by the Ameriacan Firm's CTO (see RNS) - if anyone wanted a clear signal - I think this is one to WAIT for better news from the joining of these two companies. Why didn't ARM simply buy the/his shares in the Market as they appeared?
ARM could have saved $10/share by doing this - also, I wonder that ARM doesn't have a dual-listing which would "stabalise" the US investor position.
/
Today, Friday, Intel gives the market some woes, how long before ARM follows? After mergers there is always a period of "unforseen" - rarely does the purchaser find the s/h motor he's bought is stuffed full of cash under the back-seat (etc). I've held ARM on and off over the years.

People who design microchips are pretty smart. The companies are already working together extensively and ARM wants to buy the technologies and licensing rights/royalty streams (and expand its range of activities).

Microchips are at the heart of all modern technology and the market will only grow. Whether or not they are over-paying will come out in the wash. Hopefully their advisors have gone through Artisan's books carefully.