It's hard to tell where, exactly, the rumor came from. According to the paper, "the takeover speculation was fueled by stellar second-quarter figures from Apple (on Tuesday) smashing Wall Street's forecasts," though there was nothing about such a buy mentioned on Apple's earnings call.
Still, Apple is ARM's biggest customer, and traders in the UK seem to think the idea is a good one. The price would be pretty steep for an Apple acquisition, though. Traders mentioned in the piece say that ARM could fetch more than £5.2 billion, or roughly US$8 billion. While Apple's got the cash, its recent purchases have cost much less, such as the Quattro Wireless buy in January for around $275 million, and the 2008 purchase of P.A. Semi for a rumored $278 million.