ALEX BRUMMER: Recapturing Arm a huge plus for global Britain

ALEX BRUMMER: Recapturing Arm would be a huge plus for global Britain – the UK should not allow itself to be frozen out of what happens next

Plans by Softbank to sell Britain’s Arm Holdings to a US chip powerhouse look to be in serious danger. 

The decision by the US Federal Trade Commission (FTC) to try and block the sale to Nvidia in the courts comes on top of a full probe by the UK’s Competition & Markets Authority and scrutiny by the EU. 

Competition authorities do not much like the idea that Arm’s open architecture approach to smart-chip making – where the design is leased to tech customers – be placed exclusively in the hands of Nvidia. 

Coming off the rails?: Plans by Softbank to sell Britain’s Arm Holdings to a US chip powerhouse look to be in serious danger

Processors made by Nvidia are valued for their ability to handle vast volumes of data and work, alongside traditional semi-conductors. Arm operates a neutral distribution policy and its sophisticated circuitry has the potential to displace rival technologies. 

The economics of the deal have rapidly changed since it was first announced almost 15 months ago. 

The original value of the offer, measured in Nvidia shares, was £30billion. 

The tech boom in the US drove Nvidia shares higher, raising the value of the bid to £57billion. That would create a huge payday for Masayoshi Son and Softbank. 

In some respects, the FTC has done Softbank a favour. By taking the deal to court, it effectively ties Nvidia into a legal process. Britain has good reason to watch this closely. Arm is the crown jewel of the UK’s tech sector and as technology becomes ever more advanced, its skills become ever more valuable. 

If after the probes the deal is cancelled, then one would expect Softbank to seek the highest price by floating in New York, taking advantage of stratospheric tech values. 

The Government put in place a series of stipulations when it allowed Arm to be sold on R&D and jobs. The UK should not allow itself to be frozen out of what happens next. Recapturing Arm would be a huge plus for global Britain.

It has been argued that it would be too big a bite for the London Stock Exchange. That is disputed by regulators, and it might give the City a chance to demonstrate that the charge of ‘Jurassic Park’ is misplaced and it can compete with New York as a centre for floats and equity trading.

New home 

Debbie Crosbie cannot be blamed for her escape from TSB. Personal earnings potential at Britain’s largest mutual, the Nationwide, may be limited. 

But in making the move she is swapping uncertain ownership for security and scale. 

Departing chief executive Joe Garner leaves the Nationwide, the UK’s second largest mortgage lender, in good shape. 

The society’s 2021 profits of £823m were the highest in its history and achieved against fierce competition. 

In contrast to TSB – which has just axed another 70 branches – Nationwide has been working hard to make its 630 outlets relevant. The pandemic was used to spearhead refurbishment and to bring branches closer to customers. Calls from members are diverted from the centre back to local branches, restoring the connection between client and local managers. 

Crosbie, with her background at the Clydesdale and Yorkshire bank, might see an opportunity to take Nationwide into small business loans, something tried but didn’t work. 

She will be glad to be out of TSB where the big issue was future control given Sabadell’s less than committed ownership. 

She becomes the first woman to head Nationwide and joins Alison Rose of Natwest as chief executive of a major High Street lender. 

More than a decade after the financial crisis change at the top is happening.

Private grief 

Are we seeing signs of peak private equity? As a result of muscle rippling by Pascal Soriot of Astrazeneca, private equity sharks Advent have been turned back from buying Swedish pharma giant Sobi. 

AZ is anxious that US rights to respiratory drug Synagis, in which it had global licences, do not fall into the wrong hands. 

On a separate front, Clayton, Dubilier & Rice is having difficulty in raising the £6.6billion of longer-term debt finance to fund its purchase of Morrisons. 

The more than doubling of Morrisons’ previous debt burden is seen as a big ask, coming as it does against a big sell-off of junk bonds in the last week as Omicron has shaken up markets. 

We didn’t hear much of this risk from chairman Andy Higginson and a nodding dog Morrisons board.