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July 18, 2016updated 21 Oct 2016 4:29pm

Why has the ARM sell off prompted such strong reactions?

From the Prime Minister to the Chancellor, everyone has an opinion about ARM. Softbank CEO addressed questions about Brexit and the political context of his £24bn buyout of the UK's largest tech company at a London press conference.

By Sam

The reactions to the £24bn deal which will see the UK’s most successful tech company being taken private by Japan’s Softbank has spurred strong views from many sectors.

At his London press conference today Softbank CEO acknowledged the wider context of the deal.

Masayoshi Son, Softbank CEO, said: “Yesterday I got onto the plane [to London]. I spoke with the Prime Minister and Chancellor.  This morning I had a face to face with the Chancellor.”

“This was a good communication and I’m hearing strong support for this investment. This is an endorsement into a view of the future of the UK. As I presented, I talked about doubling employment and keeping the ARM HQ in the UK and enhancing the ecosystem. These are all good things. They said ‘wow,’ that is good.

The office of the Prime Minister issued a statement backing the deal.

Mr Son said: "Many people are concerned about the complicated position of this country. I am one of those who is betting a big slice of cash. I am proving that talk is easy to talk. The multiples for this investment is 60x of ARM's last year’s income. This means the company has to sustain growth and success for many years. I can’t hit and run. This is my big bet.”

Chancellor of the Exchequer Philip Hammond said it shows the UK remains attractive to foreign investment after Brexit. "Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors," he said in a statement. "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."

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In the case of ARM’s position post Brexit Mr Son said the ARM share price increased by 15% since the referendum.

“So regardless of currency exchange rates it did not affect the value of ARM. The [fall in value of the pound] currency helped but the price went up. So net net the price was flat. It was not cheaper or more expensive. It was flat. This was not an opportunistic move.”

Would this deal prompt more investors to look favourably at UK tech companies and would Softbank invest elsewhere in the UK tech scene?

Mr Son said: “There are many good, valuable companies in the UK. So if people are reducing the price of companies, this is a good opportunity for more people to invest in UK and this [Softbank-ARM] investment may show confidence for them they can take an investment but on a smaller scale.”,

As to whether this deal will herald more investment from Softbank into the UK, Mr Son, said: “I hope so but we have no plans.”

On the subject of retaining and growing a skilled workbase for ARM Mr Son said he hoped that whatever new rules the Government has going forward [on immigration and movement of labour] would not damage ARM employees.

“They are highly skilled people so there should be no conflict. The future decisions of government I cannot decide. For the sake of the UK success going forward I hope that ARM’s skilful engineers can continue to be attracted.”

Comment:

This is not doubt a significant investment and ARM could have found the ideal parent company.

Over the last year CBR has spoken with many high profile tech sector players and the then digital economy minister who have all expressed the desire that the UK and indigenous UK tech companies should scale to compete globally with the web scale and technology giants.

One of the recurring themes within the UK tech scene is the absence of global tech giant which was founded, grew and is based on these shores.

To use a football term, the question hanging over the prospects for the UK tech sector are whether it will always be a 'selling economy.'

In footballing terms those teams that like to regularly cash in on their most valuable assets are cast as ‘selling clubs.’

That is clubs which know they can never compete with the likes of Real Madrid, Barcelona or Bayern Munich. They are content to take the cash. remain mid-table and not seek the power, the glory and the influence.

The UK has worked hard to promote itself as a magnet for tech investment built on a healthy start up and scale up tech sector. The UK continues to produce some very notable successful companies and they continue to attract the attention of global players.  See the big buy outs.

Some have welcomed this move by Softbank and ARM and point to the global digital economy representing the greatest opportunity.

Others reacted more sombrely, suggesting that again the UK’s biggest technology company will be in foreign ownership and that this continues a pattern of Britain being a selling economy.

Rory Cellan-Jones, the BBC’s technology correspondent posted a comment on BBC/news/live that although Softbank may well be a good parent for ARM there was shock and sadness around Cambridge that “Britain’s best hope of building a global technology giant may have gone.”

TechUK, the industry lobby group for UK tech said ti can’t comment on the circumstances of individual members.

Matthew Hancock, MP, newly appointed digital minister tweeted: “The proposed investment of £24bn in ARM by SoftBank highlights Britain's capability to grow & build world-beating Tech companies”

If you have views you'd wish to share about this story tweet @cbronline

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