SoftBank makes legally-binding pledge to keep ARM in Britain
SoftBank has pledged to legally guarantee that ARM Holdings’ headquarters will remain in the UK after its £24bn takeover of the British microchip designer.
The Japanese company had said it intended to maintain ARM’s Cambridge base when it announced one of the biggest foreign acquisitions in British corporate history last month, but on Wednesday upgraded this to a binding pledge.
The pledge, which comes after discussions with the Government in recent weeks, will be the first under new Takeover Panel rules designed to prevent broken promises after foreign takeovers.
When it announced the deal in mid-July, SoftBank said that its pledge to double ARM's 1,700 employees in the UK would be legally binding.
It said it would keep ARM's headquarters in the UK for at least five years, but that this was merely an intention, and Business Secretary Greg Clark pressed the companies to ensure both commitments were binding.
The pledges activate a new rule added to the Takeover Code in 2014 after Pfizer’s aborted bid for AstraZeneca, after which regulators became determined to ensure that foreign buyers stick to promises made to Britain.
Theresa May has also indicated that she will be tougher on foreign takeovers than her predecessors following the bruising aftermath of Kraft’s 2010 takeover of Cadbury, which many believe has seen the company renege on its promises.
SoftBank said on Wednesday that Grant Thornton has been appointed to audit the pledges, which can result in sanctions if broken.
Mr Clark said: “SoftBank’s commitment to double the number of UK employees and maintain the Cambridge headquarters will not only drive economic growth, it will create highly-skilled jobs and strengthen Britain’s reputation as a place where growing companies can thrive.”
The 107-page document sent to ARM investors said that shareholders will vote on the deal in London on August 30, and the takeover will be effective on September 5.
The deal will also result in a huge payday for the small group of advisers on the deal, who will share up to £230m between them. The biggest chunk of fees, up to £110.4m, will go to SoftBank’s financiers, led by Japanese bank Mizuho which arranged the £7.3bn loan used to fund the deal.
Around £120m will be paid to the Treasury in stamp duty.