Softbank’s boss Masayoshi Son is selling a 51% interest in ARM Technology China to financial investors for £587.2m
The greatest single act of industrial sabotage in Britain in recent times was the panicky sale of our world leading smart-chip company ARM to Japan’s Softbank for £24.3billion.
In the Government’s desperation to show the UK was still open for business post-Brexit, the deal was rushed through with virtually no political scrutiny and barely a squawk from the nation’s short-termist fund managers.
Now we learn that Softbank is selling a 51 per cent interest in ARM Technology China to financial investors for £587.2million.
The wisdom of allowing Beijing unfettered access to valuable smart technology must be questioned.
Britain’s failure to back the brilliant innovation emerging from our world class universities is castigated by fund manager James Anderson of the Scottish Mortgage Investment Trust (SMIT), a top-of-the-class tech investor, in a just released blog.
He argues ARM was the ‘sole serious shot’ at building a UK-based global technology platform capable of taking on Silicon Valley.
Yet Softbank was able to cruise in and buy with scarcely a voice of opposition. Anderson’s own trust was the only active fund to oppose a deal, which this paper also condemned.
Softbank’s mercurial boss Masayoshi Son rejoiced and there was no shareholder quorum to block the deal.
The same insouciance was shown towards the world-leading travel site Skyscanner when it was sold to Chinese investors.
The truth was, ARM benefited from not being an American company in the same way Spotify is beating Apple and Amazon in music downloads in spite of being Swedish.
In Anderson’s view, British companies fail to make the grade as technology champions because they are unambitious and ‘unfit for purpose’.
He notes that spin-off companies from the work done in Cambridge on the genome migrated to the US and one of these, Illumina, is valued at £28billion.
If he had wanted to, the investment trust boss could also have looked at the fintech firms such as Worldpay, merged with smaller US rival Vantiv without a murmur even though the Bank of England, among others, views Britain’s lead in financial services as the UK’s cutting edge after Brexit.
When it comes to technology Britain and the fund managers who sell are as ‘short-term greedy’ and as ‘long-term stupid’ in their mentalities as Donald Trump. What is indisputable is that Anderson knows his technology and has delivered handsomely.
What is the point in an Industrial Strategy if government, financiers and shareholders fail to back innovation for the long term and cede advantage to the US, China and all-comers?
There is no better illustration of the power of technology to disrupt than the defenestration of the High Street.
Amazon, which pays minimal corporation tax in Britain and virtually no business rates but has invested in unbeatable technology and distribution, is destroying goods shopping in Britain as we know it.
Not only does it offer reliable next day delivery and the glare of price transparency, it also dominates data storage through the cloud.
The latest victim of its market power will be House of Fraser which under new, mysterious Chinese backing looks set to abandon the High Street closing 29 of its 59 stores, mainly preserving those in shopping centres such as Westfield where footfall guarantees customers.
It is not just traditional department stores suffering. New wave retailers such as white goods specialists AO also are slumping, reporting a £13.4million loss.
The cause of its difficulty is price transparency which means it constantly has to cut margins to keep up with competitors.
The right thing for big-battalion investors in AO World to do at this stage would be to stick with the project and not retreat at the first smell of cordite.
After all, keeping faith with Ocado after some ropey years is paying off handsomely.
Financial Conduct Authority chief Andrew Bailey has finally bared his teeth. His letter to the Treasury Select Committee over the failings of TSB to tell the truth about its IT meltdown could not be more explicit.
The company’s chief executive Paul Pester was far too optimistic, he failed to share vital intelligence on IBM’s findings with MPs, it was not open about the scale of meltdown and communications were poor.
Pester cannot be allowed to survive such an onslaught and should leave immediately without compensation.