Japanese firm must honour jobs pledge in £24bn ARM deal

THE Japanese suitor for British technology giant ARM Holdings could face court action if it fails to meet promises to double staff numbers and keep its head office in the UK.

The new powers will come into force for the first time when SoftBank files papers outlining commitments which will be overseen by a specially appointed independent supervisor and monitored by the Takeover Panel.

The documents, which could be published as soon as this week, will set in stone the Tokyo-based firm’s pledges which include doubling ARM’s 1,600-strong UK workforce by 2021.

SoftBank chairman Masayoshi Son offered £24.3billion to ARM shareholders on Monday which is 43 per cent more than the closing price the previous week. The offer has been recommended by the board.

The new Takeover Code rules were introduced last year amid growing concerns that foreign firms made guarantees to smooth the passage of UK acquisitions, only later to renege on promises.

The most infamous was Kraft chief executive Irene Rosenfeld’s pledge to support Cadbury’s factory in Somerdale, near Bristol – only to announce its closure six days after the acquisition was completed in 2010.

The approach by SoftBank has faced criticism from some concerned that Britain could lose out in jobs or taxes.

But a source familiar with the new rules said: ‘People are looking back to commitments made by Kraft and wondering whether these promises matter or amount to anything. But this is a new landscape. There is a legal framework and it absolutely does matter from now on.’

Commitments must be ‘specific and precise’ and ‘be readily understandable and capable of objective assessment’, according to the Takeover Code.

They must also ‘prominently state any qualifications’ – a clause designed to prevent firms from hiding behind small print to escape commitments or changing their minds.

The powers also allow the Takeover Panel to request an independent supervisor – likely to be an accountancy firm – to report on progress.

ARM Holdings chief executive Simon Segars said: ‘There have been companies in the past that have made promises which have then later been reneged on and nobody ends up feeling good about it.

‘The new rules say that these commitments become legally binding and we are a bit of a test case. I think this is a positive for high-tech jobs in Britain.’