SoftBank shares sink 10 pct after $32 bln ARM purchase

TOKYO (Reuters) - Shares in SoftBank Group Corp plunged 10 percent in Tokyo on Tuesday to a 3-1/2-month low, after the heavily indebted company said it would buy Britain's ARM Holdings for $32 billion.

The purchase, announced on Monday, is SoftBank's largest takeover to date and piles on more debt at the Japanese tech and telecoms group, whose investments have ranged from U.S. carrier Sprint to Chinese e-commerce giant Alibaba .

The 17 pounds-a-share price tag for ARM represented a 43 percent premium to Friday's close.

SoftBank's charismatic founder Masayoshi Son has said the company had raised nearly 2 trillion yen ($19 billion) in cash over the last few months through asset disposals, including the sale of shares in Alibaba. SoftBank has also secured a 1 trillion yen ($9.42 billion) bridge loan from Mizuho Bank to finance part of the ARM purchase, it said on Monday.

Analysts, however, had expected SoftBank to use the cash from asset sales to reduce its debt or give shareholders a windfall by buying back its own shares.

SoftBank had interest-bearing debt of 11.9 trillion yen ($112 billion) at the end of March, including 4 trillion yen at Sprint, and its net debt currently stands at 3.8 times core earnings.

SoftBank shares were not traded on Monday, a market holiday in Japan.

($1 = 106.1200 yen)

(Reporting by Chang-Ran Kim; Editing by Ryan Woo and Edwina Gibbs)