The buy up begins

[Suff]

On the surface it seems like a simple tech announcement about a UK company being bought by an international firm.

Until you get, quite literally, to the last sentence of the article.

The deal comes just weeks after Britain voted to leave the European Union, battering sterling and bolstering the yen.

Not quite the "investors shunning the UK" in the event of a Brexit. Also the fact that the UK had this world spanning company that creates and owns the licenses for the technology which powers vast numbers of smart phones and all other sorts of kit, like my Amazon Fire TV stick.

On a side note I wonder who remembers that this came out of Acorn computers, the producer of the BBC micro and the Acorn Archimedes (the first ARM chips)???? Cambridge technology leading the world. As it has in so many other ways.

[Workingman]

The deal comes just weeks after Britain voted to leave the European Union, battering sterling and bolstering the yen.

Not quite the "investors shunning the UK" in the event of a Brexit.

Definitely not! More like opportunist spivs buying low, even at £17 per share, whilst the going is good. Patents and licences once owned and operated from the UK now in the hands of the Japanese. Oh, and a nice little earner for ARM Board members.

"The deal is about 12% cheaper for SoftBank than before the referendum result on 24 June and 30% cheaper in the past year."

How many more UK companies are being lined up due to the current fallout after Brexit? And how many of the new owners will do a Kraft - Cadbury some time down the line?

Hold the Champagne. Brexitopia is some way off.

[Suff]

All true. But this kind of thing goes on all the time. I didn't notice the US doing a USexit when they bought Sprint, which is a Global communications network.

What this comes down to is Investment in UK assets which are world leaders. OK it's bought but the article also talks abut new jobs investment and "developing" the business further.

There is more money paid out in wages and taxes on wages and materials produced in the UK than there is on taxes on profit which are paid to the government.

Reality is this. Raw materials, facilities, utilities and Labour rack up some 50% of costs. Then there is packaging, marketing, advertising and, in some cases shipping. Companies are hard pushed to make 5% profit on such a global company. So the only way they can make back paying twice the book value for the company is to grow the business. 1,600 new jobs in the UK at an average 25,000 per year, this is a high tech sector they don't manufacture in the UK so wages are mainly for designers and architects, as a very low estimate, means £40m in direct wages, £14m in direct taxes from the employees and £5m in direct company NI charges. Every Year.

I call that "Investment" with a capital I. Another hundred like it and we've just upped our GDP by 4 Billion or more......

I know your concerns about investors doing a bunk with the money. But, in fact, where are they going to put it that returns 100% on principal over and above all the dividends they have had over the last two decades? If the naysayers shut it and let us get on with it they'll invest in the UK. If the BOE and the government keep talking down the economy they will invest it elsewhere and who would blame them???

[Workingman]

Oh, I am so glad that I left my rose-tinted spectacles money in the bank.

Sofbank shares down 10%, with it being massively in debt, buying on borrowed money it cannot guarantee to pay back. Hermann Hauser co-founder of ARM, and other tech bosses, saying the deal is bad for UK tech.

[Suff]

I take a different view. Next year when the group shows revenues up by 60% and profit up byt 30% everyone will forget that they had to borrow to buy one of the hottest properties in the technology market. IOT is heavily ivested in ARM and there are no real viable competitors for the crown. So the growth is expected to be non linear in the next decade.

The value of the money borrowed is dropping year by year. The gross income of the combined companies will be more than sufficient to support it and the value of the business, as a whole, will continue to grow. Those who will lose out of this are those who decided to make a quick profit on a generous offer. That generous offer only happened because the £ fell so much but the business itself has very little to do with the UK, per se, as it is an international business who's designes are used everywhere in the world.

I don't have rose tinted specacles, I have a hard head for seeing opportunity.

[Workingman]

If the co-founder could not see revenues up by 60% and profits up by 30% - in a year! - and thinks the deal is not good for UK tech then I will go along with that.

[Suff]

Of course he couldn't. Because he didn't buy another company.

It's the chimera that all businesses sell when they buy out another one. Increased profits. Naturally the % of profits are not increased and may even drop. But all the board wants is to see the headline figure which has increased because the group has grown. Because that is what they get their bonuses on and they are only having to deduct the repayments on the loans, not the priciple. Of course when the share price rises again and things are stable they will have a rights issue, pay off the debt and their bonus payments will quadruple.

I'd do it. Even if it is a lie. It is a lie everyone else is telling anyway so why be the poor honest man???

But in the short term all those investors get a 100% return on their money and have to look for somewhere else to invest it. If only 25% of that money comes back into the UK, that's nearly £8 Billion of investment in the UK.

Am I going to sniff at it? Not a chance. Am I going to go all pious and stop other companies going the same way? Not a chance. Because this is how countries grow their economy. The UK is really great a creating world leading businesses. So take the money and create another one. Then sell that one off, with increased jobs and go create another one.

Or we could just stand their like a stubborn schoolboy and shout about our "assets" being stripped. This is business, not government. They're not being stripped, the fund paid top dollar for it and we should use that money to invest in more growth for the UK. The best way to do that is ensure that no matter what bank they put it in, they'll make no money out of it. In fact the only way the winners should be able to make the kind of money they want from it is to re-invest it in more technology start ups.

No matter how you look at it, this is good news. To the British jobs created, the Tax revenues it's going to bring in and the money in our investors hands who can use it for more investments in the UK. After all the £ is weak and they will get more for their money.

What's so hard to work out? Although the politicians want to make an issue of it. Typically. Damaging our economy and competitiveness in the process. Plus ca change.

[Suff]

Moot point. Looks like the naysayers have won the day. Apparently it was too much of a good deal for ARM and not enough of a deal for the buyer...

1600 jobs gone. Just with a few negative words.