Softbank intends to preserve the UK tech firm’s organisation, including its existing senior management structure and partnership-based business model, ARM said.
Masayoshi Son, chairman and chief executive of Softbank, said: “This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.
However, the co-founder of ARM Hermann Hauser said: “This is a sad day for me and a sad day for technology in Britain.”
“ARM is the last British [technology] company that has a global reach,” he said.
“It gave Britain real strength. It was a British company that determined the next generation microprocessor architecture.”
Analysis: Simon Jack, BBC business editor:
ARM Holdings is arguably the most precious jewel in the crown of British technology, its microchip designs are used in billions of devices.
Sources close to the deal say the Japanese company considers ARM well placed to exploit the so called “internet of things” which may see microchips embedded in whole new categories of household and business devices.
Prime Minister Theresa May recently questioned whether foreign takeovers of UK firms are always in the national interest. However, Softbank has committed to doubling the size of ARM’s UK-based workforce over the next five years and new Chancellor Philip Hammond welcomed the deal.
That allure has been boosted by the fall in the value of the pound since Brexit – making UK targets cheaper and many industry watchers are predicting a new wave of foreign takeovers.
ARM has until recently argued that its future was better served as an independent company. However, Stuart Chambers, ARM chairman since March 2014, is no stranger to making it big in Japan. He was responsible for selling Pilkington, another blue chip UK company, to Nippon Sheet Glass in 2006.
Prime Minister Theresa May said the deal between Softbank and ARM Holdings showed the UK economy could be successful after the country voted to leave the European Union.
A spokeswoman for the prime minister said Mrs May believed the deal was in the country’s national interest – a gauge that she will use to assess any future foreign takeovers.
“This is good news for British workers, it’s good news for the British economy, it shows that, as the prime minister has been saying, we can make a success of leaving the EU,” the spokeswoman added.
Dan Ridsdale, analyst at Edison Investment Research, said “An increase in inbound merger and acquisition activity was one of the obvious consequences of Brexit and weakened sterling, but few expected it to manifest itself so quickly or at so large a scale.”
Former Business Secretary Vince Cable told the BBC there was usually very little the government could do to prevent takeovers.
“We don’t have a system of defence against takeovers if they prove to be unsatisfactory,” he said.
Mr Cable added the government had few legal powers to stop takeovers unless it could be demonstrated there was a national security issue.