The Daily Telegraph - Business
Ministers to step in as US tech titan buys Arm
Fears $40bn deal would threaten jobs and mark end of British chip maker’s Cambridge headquarters
THE Government is set to attach strict requirements to the takeover of British microchip company Arm by the American tech giant Nvidia, amid fears the sale could lead to a hollowing out of Arm’s Cambridge base.
Nvidia and Arm’s Japanese owner SoftBank are due to announce a cash and shares deal worth more than $40bn (£31bn) as soon as this morning, in one of the biggest deals ever involving a British technology company.
However, ministers are believed to be pushing for conditions to be applied to the sale in order to protect jobs in the UK and Arm’s British headquarters.
Nvidia, based in Silicon Valley, is expected to make significant pledges to the Government in the hope that the deal will not be subject to a lengthy review on competition or national security grounds when the takeover is announced.
When SoftBank bought Arm for £24bn in 2016, it committed to doubling the company’s workforce in the UK and to maintaining its headquarters in Cambridge.
Those pledges would remain legally binding in the event of a takeover but expire in the second half of next year. MPs have raised fears that becoming part of Nvidia could see Arm’s base eroded, and have pushed for an extension of jobs pledges or other conditions.
Ministers are now considering referring the deal to the Competition and Markets Authority (CMA) under the 2002 Enterprise Act on national security grounds, according to the Financial Times. A Government spokesman said it was prepared to step in if security could be affected.
“Where we feel a takeover may represent a threat to the UK, the Government will not hesitate to investigate the matter further, which could lead to conditions on the deal,” the spokesman said.
Nvidia, which is worth $300bn and this year became the biggest US chip company, is best known for making graphics processors used in high-end PCs and supercomputers.
Buying Arm, whose designs are used in the majority of the world’s smartphones and tablets, would be its biggest deal ever but analysts have said the tie-up is likely to face intense scrutiny.
Arm licenses its chip architecture to other manufacturers including for aerospace and defence companies, and regulators are likely to look for assurances that access to its technology will remain in place after any deal.
The CMA has taken a more active approach to technology mergers in recent years amid growing concerns about competition in the industry.
SoftBank is selling Arm under pressure from investors to dispose of some of the investments it has built up in an acquisition blitz over the past few years. It had considered floating the company in New York but Nvidia’s interest, coming after a bull run in the US company’s shares, has led to a sale. It is likely to become the largest shareholder in Nvidia after the deal.
Under Japanese ownership, Arm has largely stuck to its hiring pledges. Last September it had 2,742 staff in the UK, up from 1,747 three years earlier.
It recently halted a plan to spin off its internet of things division, which would have made it more difficult to hit a target of almost 3,500 by next October.
The proposed sale of Arm has been criticised by its co-founder Hermann Hauser, who has said the Government should intervene to block it.