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

- By James Tit­comb in San Fran­cisco Business · Investing · Nvidia · Cambridge · SoftBank · United Kingdom · New York City · United States of America · Financial Times

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.

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