One of the UK’s technology success stories, chipmaker ARM Holdings, is set to be taken over by Japanese group SoftBank.
The technology firm designs microchips for smartphones and employs 3,000 people. It has said it intends to keep its headquarters in Cambridge and to double its number of staff.
About turnThe sale of the firm was welcomed by newly appointed Prime Minister Theresa May. However, George Parker and Yukako Ono report for the
Financial Times that many were taken aback by her reaction. They write that just days earlier, May had said the Government should step in when foreign firms look to takeover British businesses that are valuable to the economy and communities.
3,000
The number of employees at ARM Holdings
Parker and Ono quote May’s official spokeswoman: “This shows we can make a success of leaving the EU. This is clearly a vote of confidence in Britain. This is the biggest ever Asian investment into the UK.”
Downing Street said May intended to take a “case by case” approach to foreign takeovers, prompting some to suggest this could make Britain a less predictable location for foreign investors.
Financial Times article
Unlikely bet
From a SoftBank perspective, the purchase of ARM may not appear to be a safe bet to an outsider, but it is one that is likely to pay off, says technology blog writer Sam Byford in
The Verge.
SoftBank shares plummeted after the acquisition news broke, with investors predicting the move to cause trouble for the Japanese company. However, ARM stock rose.
The firm’s Chief Executive Masayoshi Son has made “countless risky investments that have often paid off big” in the past few decades, according to Byford. He relates how SoftBank bought a 51% stake in Finnish mobile game developer Supercell for around $1.5bn in 2013, recently selling off 84% of its share for $8.6bn.
SoftBank also recently sold around $10bn of its shares in Chinese e-commerce firm Alibaba. “Son’s initial $20m investment gave SoftBank almost a third of a company now valued at over $200bn”, writes Byford.
The technology group also invested heavily in the iPhone at a time when rival firms were ignoring it, he says – a bet that obviously paid off.
The Verge article
Asia rising
Asian tech firms are continuing to rise up the ranks in the industry, with the ARM takeover by SoftBank the second of its type in two weeks, according to John Shinal, writing for
USA Today.
Korean firm Naver, parent of Japan-based messaging service Line (LN), sold off part of its ownership stake recently in “the biggest tech IPO so far this year,” writes Shinal.
“The surge in mega-investment deals and valuations suggests those who still think of the region as focused only on low-end parts of the technology value chain are mistaken,” he says.
Referencing Preqin research, the article says that companies in Asia raised a record amount in venture capital in the second quarter of this year, at $19bn.
“All this buying means Asian investors are assuming more of the global risk in investing — tech and otherwise — as well as capturing more opportunity.
“With rising valuations spurring more investment in a virtuous cycle, Asian deals could end up being among the biggest tech acquisitions and IPOs of 2016.”
USA Today article
Seen a blog, news story or discussion online that you think might interest CISI members? Email jules.gray@wardour.co.uk.