ALEX BRUMMER: Government must play a hand to bring Arm back to Britain

When Softbank arranged the £30billion sale of Britain’s top technology firm, Cambridge-based Arm Holdings, to gaming chip maker Nvidia last September it was looking for a clean trade sale.

At the time, Softbank’s boss Masayoshi Son was in a hurry. A number of his big bets on tech had hit the buffers and he sought to trade himself out of difficulty by making some huge bets on Wall Street. 

His interventions led to the price of the technology sector whipsawing and the visionary was exposed as no more than another speculative trader.

It was to Softbank that the Tory government sold Arm in 2016 on the grounds that the Japanese investor was a safe pair of hands, and the decision to nod it through, admittedly with some R&D and employment pledges, would show that Britain was open to business in spite of the Brexit referendum outcome.

Of the many overseas takeovers of British companies in the last two decades, the sale of Arm is most damaging.

A product of the BBC’s search for digital literacy, it moved from being just another computer outfit, Acorn, to developing some of the most sophisticated technology in the world by incorporating software on the chip. 

It offered the gateway to the internet of things. It was technology developed as a result of collaboration between a national broadcaster, scientists and engineers at Cambridge and the private sector. 

The intellectual property was as much a triumph for the UK as the Oxford-Astrazeneca collaboration.

What has happened since the sale has surpassed worst fears. The Cambridge headquarters remains the beating heart of the company and R&D spending has been maintained. 

Slowly but surely, though, Arm has been dismembered, with the China offshoot sold to Beijing-dominated interests.

The biggest betrayal has been the proposed sale to Nvidia which would draw a curtain down on Arm’s model of open access to its products.

The decision of competition authorities in London and Brussels to conduct a full-scale probe into the deal means that finally Britain and the EU have woken up to the implications of allowing Silicon Valley to suck the blood out of Europe’s tech. 

The inquiries could take up to 18 months, which could test the patience of Son and his Nvidia counterpart Jensen Huang.

The Government is showing a willingness to intervene where necessary on overseas takeovers on national security and public interest grounds. 

It should use the interregnum to persuade Softbank it has made a terrible error and to re-float all or part of Arm on the London Stock Exchange.

That would be good for Britain and good for the City.

Healthy option

Thanks to the resistance of former Dutch chief executive Paul Polman, one company which did resist a debt-fuelled overseas takeover is Unilever.

Under the guidance of his successor Alan Jope it has unified its ownership and control in London, and recognised the value of Polman’s tack towards a sustainable company. It adjusted well to the pandemic lifting underlying sales in 2020. 

Covid costs undermined margins, and pre-tax profits at just under £8billion took a small hit.

Jope is setting a new course and believes he can pack a five-to-10 year transformation into a much shorter timescale.

The aim is to focus on fast growing USA, China and Indian markets, recognising the changing shape of the global economy. 

Jope wants to build up Unilever’s brands and operations in health and nutrition, developing existing products such as Horlicks as well as new categories such as Smarty Pants vitamins. This fast growing area already represents some 4 per cent of turnover.

Armed with a simpler share structure, we should not discount the idea of Unilever being a player, should a substantial healthy nutrition or personal care opportunity arise. Instead of hiding in Rotterdam, Unilever is ready to be the predator rather than prey.

Little faith

Labour tweeters waffle on endlessly about a ‘double-dip recession’. I suggest they read the minutes of the Bank of England’s Monetary Policy Committee. 

‘They say ‘GDP growth is expected to have risen a little in the final quarter of 2020’.

That means that even if the current lockdown period is deeply negative, there should be no second recession as that requires two successive quarters of downturn. QED.