Japan’s SoftBank Group agreed Monday to buy British chip designer ARM Holdings for £24.3 billion, or about $32 billion, committing its largest acquisition to the architecture inside nearly every smartphone and to a future of billions of connected machines. The all-cash offer of £17 per share values ARM 43 percent above its closing price on Friday.

ARM’s board unanimously recommended the transaction, which is to proceed through a court-sanctioned scheme of arrangement and requires shareholder approval. The companies’ formal announcement says SoftBank will acquire about 1.41 billion shares and expects the deal to close during the third quarter.

Buying the design layer, not a factory

ARM occupies an unusual and powerful position in the semiconductor market. It generally does not manufacture chips. Instead, it designs energy-efficient processor architectures and licenses them to companies that build chips for phones, tablets, automobiles and embedded systems. Licensees include many firms that compete directly with one another, allowing ARM to collect fees and royalties while remaining a neutral supplier.

Its low-power designs dominate mobile devices, a market built around extending battery life rather than maximizing the raw performance associated with personal computers. Reuters reported that SoftBank intends to preserve ARM’s management, Cambridge headquarters and licensing model while accelerating investment.

The acquisition gives SoftBank ownership of intellectual property at a foundational layer of modern computing. Every additional licensed chip can expand ARM’s royalty base without requiring the company to finance a fabrication plant. That economics helps explain why Masayoshi Son, SoftBank’s chairman and chief executive, is willing to pay a substantial premium despite slowing smartphone growth.

A wager on the Internet of Things

Son described connected devices as the next major technological shift. Sensors, vehicles, household equipment, industrial machinery and medical devices will require processors that consume little power and can be produced at low cost. ARM already supplies designs for many of those uses, making it a direct way for SoftBank to bet on the so-called Internet of Things.

Wired’s analysis of the strategy noted that mobile still generates about two-thirds of ARM’s royalty revenue even as more than half of recent licenses cover products associated with connected devices. The transaction is therefore both a purchase of a mature smartphone franchise and a wager that ARM can repeat its mobile success in a far more fragmented market.

SoftBank’s investor presentation and media briefing frame the deal as a “paradigm shift.” Son has moved the company from software distribution into internet investments, Japanese telecommunications and control of the American carrier Sprint. ARM would become a wholly owned subsidiary but operate with substantial independence.

Price, currency and post-Brexit Britain

The timing has made the agreement a test of Britain’s technology policy after the vote to leave the European Union. The pound’s decline against the yen reduced the foreign-currency cost of a British acquisition, though Son said the referendum was not the reason for the purchase. ARM shares had already risen after the vote and climbed more than 40 percent on the announcement.

SoftBank promised to at least double ARM’s United Kingdom workforce over five years and increase employment outside Britain. It also pledged to keep the company’s headquarters in Cambridge, maintain its brand and preserve its partnership-based business model. ARM’s own transaction statement highlighted those commitments alongside the 43 percent premium.

The pledges helped secure a favorable response from the new government of Prime Minister Theresa May, which is seeking evidence that Britain remains open to global investment. But they also underline the sensitivity of selling one of the country’s most important technology companies to a foreign owner. The commitments on jobs and headquarters will be central to political scrutiny as shareholders and the court consider the arrangement.

Wired UK’s examination of the currency effect estimated that the weakened pound made ARM materially cheaper for a yen-funded buyer than it had been earlier in the year. That does not settle whether the price is low or high: shareholders receive a record premium, while SoftBank acquires an asset whose products and royalties are distributed globally.

Financing a concentrated bet

SoftBank plans to fund the purchase with cash and a bridge loan, adding the transaction to a balance sheet already shaped by debt and investments in Sprint and Alibaba. The scale makes ARM a concentrated strategic commitment rather than another minority investment. It also arrives shortly after Nikesh Arora, once viewed as Son’s successor, left the company, leaving Son firmly in control of capital allocation.

The Wall Street Journal reported that Son considers the acquisition the start of a new investment phase. The challenge is that forecasts for connected devices vary widely, and licensing revenue from small, inexpensive chips may take years to justify the purchase price.

ARM’s neutral licensing relationships also require care. Customers choose its designs partly because the company does not compete with them in chip manufacturing. SoftBank owns telecommunications businesses and a growing portfolio of technology assets, but it says ARM will remain independent. Any perception that confidential road maps or license terms could favor affiliates would threaten the model SoftBank is paying to acquire.

A transaction still requiring approval

The deal must win ARM shareholder support and approval from an English court. A filing with the U.S. Securities and Exchange Commission sets out the scheme process and financial advice to ARM’s board. Competing bidders could still emerge, though the premium and transaction size raise the cost of an alternative.

The proposed acquisition is remarkable less because SoftBank is buying another communications company than because it is buying an industry standard. ARM’s architecture sits inside products sold by hundreds of manufacturers, and its future depends on remaining useful to all of them. If connected devices become as ubiquitous as Son expects, control of that design layer could place SoftBank at the center of the next computing expansion. If the market develops more slowly or fractures among rival architectures, the £24.3 billion price will look far more demanding.