STORM OVER JAPAN RAID ON WORLD CLASS UK TECH GIANT

THE sell- off of Britain’s top technology firm last night sparked fears of more foreign takeovers.

SoftBank of Japan has struck a £24billion deal to purchase ARM, which designs microchips used in Apple smartphones.

A senior MP said the sale was as bad as a football club flogging its best players. Another said Britain had lost the ‘jewel in its tech crown’. On taking power last week Theresa May vowed to protect strategic firms.

The Prime Minister argued she would have blocked the takeover of Cadbury’s by Kraft that cost hundreds of jobs.

But her Chancellor, Philip Hammond, last night insisted the ARM deal would turn a ‘great British company into a global phenomenon’. Anxious to promote the economy in the wake of the Brexit vote, he added: ‘Britain is open for business – and open for foreign investment.

‘SoftBank’s decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth.’

Shares in ARM soared 41 per cent yesterday on what its founding father described as ‘a sad day’. Hermann Hauser said it meant the ‘determination of what comes next for technology will not be decided in Britain any more

but in Japan’. Former business secretary Lord Cable suggested the Chancellor risked making a fool of himself by rushing to welcome the deal. He said it put the new Prime Minister in an ‘embarrassing’ position.

There are still hurdles before the deal can be sealed. It needs the approval of shareholders and then of regulators including the Takeover Panel and the Competition and Markets Authority. ARM would then be delisted and taken out of the FTSE 100 index.

The Government has limited powers to block takeovers, but can do so if they pose a threat to national security, financial stability, and the quality of the media.

The chairman of the Commons business, innovations and skills committee last night warned the fall in the value of sterling following the referendum could lead to a ‘firesale of great British companies’ to foreign firms now able to pick them up more cheaply.

Iain Wright, who is a Labour MP, added: ‘Despite the reassurances about this deal I do worry this company is like a football club selling its players rather than cultivating its talent. We have to look at this very closely to make sure our companies don’t get to a certain size and then sell out. When foreign companies own our assets they tend to pull out investment at the first sign of trouble.’

Mrs May yesterday said the planned deal between SoftBank and ARM Holdings showed the economy can thrive after Brexit.

Her spokesman added: ‘This is good news for British workers, it’s good news for the British economy, it shows that, as the prime minister has been saying, we can make a success of leaving the EU.’

SoftBank hopes the takeover will enable it to capitalise on the growth of the ‘ internet of things’. ARM is a force in this developing sector where devices such as fridges and washing machines can be connected up and controlled by smartphone.

In a bold effort to get ministers onside, the Japanese firm has guaranteed to double the UK workforce – creating 1,500 jobs – in the next five years and maintain its headquarters in Cambridge.

SoftBank’s billionaire chairman Masayoshi Son claimed these guarantees had impressed both the Prime Minister, who he spoke to on Sunday morning, and the Chancellor, who he spoke to yesterday. He said they both reacted by saying ‘wow’.

Bosses at ARM have recommended the deal to shareholders, who will then vote on whether to approve it in the next few weeks.

But Cambridge’s Labour MP Daniel Zeichner raised concerns about the purchase and said the Government needed to make sure the guarantees are honoured.

He said: ‘Within weeks of the European referendum we are seeing the sale of the jewel in the UK tech crown, Cambridge’s greatest modern success story. Analysts will debate the impact on ARM, but there can be no doubt that Britain is losing control of one of our most innovative and successful companies.’

He added: ‘ There has been a chill running through Cambridge since the EU referendum on June 23, and today’s news only reinforces the sense that the country has taken a wrong turn.’

Five years ago Cambridge was home to at least three worldbeating UK- owned technology firms, ARM, Autonomy and Cambridge Silicon Radio.

Autonomy was bought by American giant HP in an ill-fated deal, and last year US chipmaker Qualcomm bought CSR.

Founded in 1990, ARM was spun out of Acorn Computers, which was set up in a converted barn in Cambridge in 1978 and developed the BBC Micro computer which was used in almost every school in the UK in the 1980s.

Lord Cable, who opposed the failed takeover of British drugs giant AstraZeneca by US rival Pfizer two years ago, urged ministers to scrutinise the takeover closely.

‘I don’t know why British companies that are doing well feel they have to sell out. But this is the reason why we don’t produce our own Googles, Facebooks and Amazons,’ he said.

‘At the very least I think the Government should give this deal a thorough going over – instead of rushing out to welcome it, they should show more caution.

‘Philip Hammond risks sounding like George Osborne, who made a fool of himself when he rushed to back the takeover of AstraZeneca.

‘This puts Theresa May in an embarrassing situation given the strong stance she took against foreign takeovers last week. She is finding that her ministers are not taking her concerns seriously.’

Bankers are set to pocket more than £90million of fees from the sale of ARM. The takeover by SoftBank will trigger massive payouts for the advisers, according to Reuters and Freeman Consulting Services.

Seven firms will divide the spoils, with each side in the deal – the biggest Asian investment in the UK – expected to hand out between £38million and £45million. Goldman Sachs and Lazard will pocket the lion’s share.

TO most of us, ARM holdings is not a household name. Yet this cutting-edge British technology company plays a part in the daily lives of hundreds of millions of people around the globe.

Based at Cambridge, it designs the microchips used in Apple and Samsung smartphones and is pioneering the so- called ‘internet of things’, by which household appliances are controlled directly from your mobile phone.

So the fact it’s about to be sold to a Japanese company – SoftBank – and become the latest important British enterprise to be snapped up by foreign buyers, is a cause for profound concern.

The £24.3billion price tag seems an excellent deal for shareholders and SoftBank says it will stay in Cambridge and expand the workforce.

Chancellor Philip hammond hailed the bid as proof that Britain ‘has lost none of its allure to international investors’ since the Brexit vote.

That may indeed be good news but isn’t this the sort of deal Theresa May was talking about just a week ago, when she promised ‘radical’ Government action to defend important UK firms against foreign takeover?

ARM may not be vital to national security but it is a brilliant example of worldbeating British innovation that we cannot afford to see fall into foreign hands.

For all the Japanese promises, shouldn’t cast-iron guarantees be sought about the company’s long-term future in Britain and the security of its 3,000 employees? Too much is at stake for a hasty waving-through of this sale.

With the pound having fallen sharply, there will soon be more raids on British firms. We need a strategy to ensure they don’t harm the economy and cost jobs.