FDI Japanese investments in EU M&A R&D Science & Technology

SoftBank acquires ARM Holdings plc driven by paradigm shift to Internet of Things (IoT)

On 18 July 2016 SoftBank announced to acquire ARM Holdings plc for £17 per share, corresponding to £24.0 billion (US$ 31.4 billion)

by Gerhard Fasol

SoftBank acquires ARM: acquisition completed on 5 September 2016, following 10 years of “unreciprocated love” for ARM

On 18 July 2016 SoftBank announced a “Strategic Agreement”, that SoftBank plans to acquire ARM Holdings plc for £24.0 billion (US$ 31.4 billion, ¥ 3.3 trillion) paid as follows:

  • Cash on Hand: £16.7 billion (US$ 12.5 billion, ¥ 2.3 trillion)
  • Loans: £7.3 billion (US$ 9.5 billion, ¥ 1.0 trillion)
  • Total: £24.0 billion (US$ 31.4 billion, ¥ 3.3 trillion)

(excluding 20.4 million shares (1.4%) that SoftBank already owned on 18 July 2016).

Acquisition schedule:

  • 18 July 2016: Strategic agreement between SoftBank and ARM announced by SoftBank
  • 5 September 2016: effective date of Scheme of acquisition
  • 6 September 2016: ARM delisted, cancellation of listing of ARM shares
  • 12 September 2016: cancellation of listing of ARM US Depositary shares (ADS)

Straight line from SoftBank’s acquisition of Vodafone-Japan to acquisition of ARM

In a detailed interview in Nikkei on 3 September 2016, Masayoshi son explained that he was interested in ARM ever since about 1906, when saw the paradigm shift from PC to mobile, when he discussed his designs for mobile internet handsets with Steve Jobs, and when he acquired Vodafone-Japan (see: Why did Vodafone fail in Japan? … and miss an opportunity of US$ 83 billion).

SoftBank’s acquisition of Vodafone Japan is explained here: Softbank acquires Vodafone Japan with co-investment from Yahoo KK

SoftBank’s acquisition of Vodafone Japan – in combination with having developed YAHOO-Japan into the leading internet service company in Japan – enabled SoftBank to become a key global player in mobile communications.

Masayoshi Son: unreciprocated love for ARM for 10 years

In the Nikkei interview of 3 September 2016, Masayoshi Son explains that he had an “one-sided / unreciprocated love for ARM” for at least 10 years, but decided to acquire SPRINT first. After acquiring SPRINT he had to pay down debt before being able to acquire ARM now.

ARM Holdings plc

ARM was founded on 27 November 1990 as Advanced RISC Machines, however the abbreviation ARM was first used in 1983 and initially meant “Acorn RISC Machines”.

Acorn Computers Ltd was founded in 1978 in Cambridge (UK) by Hermann Hauser and Chris Curry to produce computers, and its most famous product was the BBC Micro Computer.

ARM has built an ecosystem of IC design systems and platforms which are at the core of low energy consumption ICs and CPUs for smartphones and many other electronic devices and cars. ARM may become or already is one of the core technology companies for the Internet of Things (IoT).

SoftBank’s ARM Business Department’s name changed to “New Business Department”

On 3 September 2016 SoftBank announced that the name of SoftBank’s ARM Business Department has been changed to SoftBank New Business Department.

SoftBank today and 300 year vision report:

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FDI Japanese investments in EU R&D

Hitachi Rail Europe Ltd opens £82 million train factory in Newton Aycliffe, County Durham, UK

Hitachi received orders for 866 Intercity Express Program (IEP) carriages and for 234 carriages for Abellio’s ScotRail program, following 174 “Javelin” carriages

Hitachi Rail putting competitive pressure on Europe’s rail established rail manufacturers: Hitachi Rail has “on time delivery” at the top of the list of commitments to customers

by Gerhard Fasol

Winning a series of train contracts, Hitachi Rail invested £82 million (= approx US$ 130 million) in a train manufacturing plant in Newton Wycliffe, Country Durham, UK.

Hitachi Rail Europe announced contracts for the following train carriages to be built in the Newton Aycliffe facility:

The £ 5.8 billion ($ 10 billion) Intercity Express Programme (IEP) was initiated in 2005 by the UK Department of Transport.

Earlier in 2004, Hitachi received an order for 29 6-car high-speed Class 395 “Javelin” trains (a total of 174 carriages), which went into regular service on 30 December 2009 on the Integrated Kent Franchise, between London St. Pancras Station and Ashford International Station, traveling this approx. 100km distance in 37 minutes, an average speed of 162 km/h.

For a background of the international business aspects of Hitachi, read an essay by the emeritus Chairman of Hitachi Europe, and emeritus Board Member of Hitachi Ltd. Sir Stephen Gomersall.

Hitachi Rail to challenge European rail manufacturers Siemens and Alstom

Europe is one of the world’s biggest rail markets, and has a number of established rail manufacturers including:

There has been a series of recent problems in Europe’s established rail industries, which may have contributed to Hitachi’s considerable business success in Europe:

Rail in Europe and in Japan are very very different stories

European rail services are predominantly owned, operated and controlled by Government agencies, and to some extent operations are contracted out for limited periods to private service operators, almost none of Europe’s rail services are fully privately owned and operated – a rare and very successful exception is the Jungfraubahn mountain railway.

Rail services in Japan on the other hand are largely owned and operated by a large number of private railways companies, most of which are very successful and profitable and growing and listed on the stock exchange.

Thus Hitachi Rail is used to satisfying the tough needs of very competitive and privately owned commercial rail operators, while Europe’s rail manufacturers to a large extent sell to Government controlled agencies, or directly to Governments, or under Government programs, such as UK’s Intercity Express Programme (IEP).

The Hitachi investment in context: maybe we see a shift in investment value from traditional manufacturing to intellectual business such as insurance and pharmaceutical research

Compare Hitachi’s £82 million (= approx US$ 130 million) with the recent acquisition of UK insurance company Amlin by Mitsui Sumitomo Insurance Company for £2.5 billion (approx. US$ 3.85 billion or ¥642 billion), or the acquisition of Cambridge/UK Heptares Therapeutics Ltd by the Japanese Sosei Group for US$ 400 million (US$ 180 million in cash plus up to US$ 220 million in incentives).

Of course we are comparing apples and oranges here, and the overall Intercity Express Programme (IEP) is on the order of £ 5.8 billion ($ 10 billion), but we may witness here a shift of investment value from traditional manufacturing to intellectual business such as insurance and pharmaceutical research here.

More about Japan’s electronics and electrical machinery industries

Report on Japan’s electronics industry sector (approx. 237 pages, pdf file)

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Japanese investments in EU M&A R&D

Sosei Group acquires Cambridge/UK based Heptares Therapeutics Ltd for up to US$ 400 million

Sosei Group acquires candidate drugs to compensate for expected loss of patent protection for the Seebri inhaler in 2026

Heptares Therapeutics Ltd emerged from the MRC Laboratory of Molecular Biology at the University of Cambridge

Sosei Group Corporation (そーせいグループ株式会社) is a Japanese pharmaceutical group which mainly in-licenses pharmaceutica in Europe and North America, then brings these pharmaceutica to Proof-of-Principle stage in Japan, and consecutively out-licenses these pharmaceutica for further development and marketing.

In 2026, Sosei is expected to lose patent protection for its Seebri inhaler, and to compensate for this expected loss in revenues, Sosei acquired the Cambridge (UK) based Heptares Therapeutics Ltd for up to US$ 400 million (US$ 180 million in cash plus up to US$ 220 million in incentives if certain milestones are reached).

Heptares Therapeutics Ltd

Heptares Therapeutics Ltd creates novel pharmaceutica targeting G protein-coupled receptors (GPCRs) using its StaR drug design technology.

Heptares Therapeutics Ltd started based on the research by Richard Henderson and Christopher Tate a the MRC Laboratory of Molecular Biology at the University of Cambridge (UK).

Heptares Therapeutics Ltd previously was funded by a consortium including MVM International Life Science Capital Management, Clarus Lifescience II LP, Novartis Bioventures Ltd., Takeda Ventures Inc. and the Stanley Family Foundation.

Sosei Group Corporation (そーせいグループ株式会社)

Sosei Group Corporation (そーせいグループ株式会社) was founded on June 22, 1990 with the main purpose to in-license pharmaceutica in the European and North American markets, to develop these pharmaceutica to the point of Proof-of-Principle (POP) in Phase 2a, and then to out-license these pharmaca for further development and marketing in Japan.

Sosei Group Corporation (そーせいグループ株式会社) is listed on the Tokyo Stock Exchange, Mothers Section (TSE 4565).

Sosei Group companies and subsidiaries

  • Holding Company: Sosei Group Corporation (そーせいグループ株式会社) (Tokyo and London, UK)
    • Sosei Co. Ltd.(株式会社そーせい) (Tokyo): pharmaceutical development and sales, business development in Japan
    • Sosei R&D Ltd. (London, UK): licensing and business development outside Japan
    • Activus Pharma Co., Ltd.(株式会社アクティバスファーマ) (Chiba, Japan): pharmaceutical development based on nano technology (APNT = Activus Pure Nano-particle Technology)
    • Jitsubo Co., Ltd. (JITSUBO株式会社)(Tokyo): development of peptide drugs, licensing of peptide API manufacturing technology, research related to discovery of peptide drug candidates. Acquired on December 11, 2014. Jitsubo KK was established in April 2005 by Professor Kazuhiro Chiba of the United Graduate School of Agricultural Science, Tokyo University of Agriculture and Technology. Sosei Group acquired 68.7% of voting rights for YEN 421 million (US$ 3.5 million)
    • Sosei CVC Ltd. (そーせいCVC株式会社 / そーせいコーポレートベンチャーキャピタル株式会社) (Tokyo): managing Sosei RMF1 (Regenerative Medicine Fund)

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Japanese investments in EU R&D Science & Technology

Hitachi “inspire the next” Europe opens Rail Research Centre (ERRC)

European Rail Research Centre (ERRC) to focus on rolling stock design, manufacturing, maintenance and traffic management systems

by Gerhard Fasol

ERCC will be part of Hitachi Europe’s Transportation Energy & Environment Research Laboratory

Hitachi “inspire the next” announced on October 10, 2012 the opening of the new European Rail Research Centre (ERRC) in London, to support Hitachi’s many rail projects in Europe and globally.

Hitachi’s new European Rail Research Centre (ERRC) will conduct research into:

  • rolling stock design
  • manufacturing
  • maintenance
  • traffic management systems

Hitachi Rail Europe recent orders

  • UK Department for Transport’s Intercity Express Programme (IEP): 225 km/h Super Express Trains (SETs) to be financed, supplied and maintained by Agility Trains. Total number of trains: 122 trains
  • UK Network Rail Infrastructure Limited (“Network Rail”): prototype Traffic Management System

Japan electronics industries – mono zukuri.

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