SoftBank has pledged to double the number of staff the company employs in the UK and invest further in the business, increasing staff numbers outside the UK over the next five years.
The acquisition has seen shares in ARM valued at 1,700 pence, with the company being priced at £24.3bn.
ARM, which supplies technology for Apple's iPhone, saw rising profits in April as it outpaced the market thanks to strong demand for its products.
The combined group hope the acquisition will allow it to capitalise on opportunities in the "internet of things" - giving every day objects a connection to the internet.
SoftBank said it intends to continue a partnership-based business model and that a doubling of the UK workforce will allow ARM to continue to develop leading-edge technology in the UK.
ARM's directors will recommend the deal is accepted by ARM shareholders at its forthcoming general meeting.
Chancellor Philip Hammond said the £24bn investment "would be the largest ever from Asia into the UK."
He added: "It would guarantee to double the number of jobs in ARM in the UK over the next five years and turn this great British company into a global phenomenon.
"Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business - and open to foreign investment.
"Softbank's decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth. And as ARM's founders will testify, this is the greatest place in the world to start and grow a technology business."
Stuart Chambers, chairman of ARM, said the offer was "compelling" for shareholders.
He said: "The board of ARM is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology.
"SoftBank has given assurances that it will invest considerably in the business, including doubling the UK headcount over the next five years and maintaining ARM's unique culture and business model.
"ARM is an outstanding company with an exceptional track record of growth. The board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens."
Masayoshi Son, chairman and chief executive of SoftBank, said the investment marked its strong commitment to the UK and the "competitive advantage" of the science and technology industries in Cambridge.
He said: "We have long admired ARM as a world-renowned and highly respected technology company that is by some distance the market-leader in its field...
"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."
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement