United Kingdom should stop Softbank from Buying ARM: Mass Debt and National Interests

United Kingdom should stop Softbank from Buying ARM: Mass Debt and National Interests

Sawako Uchida and Lee Jay Walker

Modern Tokyo Times


The United Kingdom government should step-in in order to protect ARM Holdings being sold to highly indebted Softbank. Not only is the debt ratio of Softbank alarming, but more important the national interests must be protected. After all, how many British companies must be sold in key sectors before successive government thinks about national interests?

Hermann Hauser, co-founder of the highly respected ARM, is clearly saddened by events taking place. He said, This is a sad day for me and a sad day for technology in Britain… It gave Britain real strength. It was a British company that determined the next generation microprocessor architecture.”

Richard Parker, CEO at Wildfire, said, SoftBank’s acquisition of ARM is more significant for the UK technology industry.  For years ARM has been the standard bearer, a company that could stand on the global stage and represent the best of British technology and innovation. Since the sale of Autonomy and the implosion of Imagination it stood pretty much alone. So this is a big blow to our pride – who can we point to now to represent the UK technology industry?”

This is a major problem for the United Kingdom like Richard Parker alludes to. Of course, the nature of capitalism and the free market is based on takeovers and new investments. However, something must be done to protect certain companies when it applies to national interests.

Shockingly, what makes the situation even more problematic is the economic state of affairs at SoftBank, in relation to mass debt. It could well be that SoftBank turns out to be a great investment for ARM. However, a major risk is being taken with such an important British company in this powerful sector. Therefore, given the strategic national interests, it makes the takeover bid even more alarming.

Immediately after the takeover bid became known in Japan, then many investors sold shares in this country. The BBC reports Shares in Japan’s Softbank fell by more than 10% on Tuesday after being hit with a glut of sell orders following its purchase of ARM Holdings.

The Daily Mail highlights the debt crisis at Softbank that needs to be addressed. This media source says, “The purchaser, SoftBank of Japan, has seen its debt mountain soar more than fivefold in four years to reach £85 billion… Investors in Tokyo said this could make the £24 billion purchase of ARM unsustainable.”

It appears that the British government is easy to rubber stamp the demise of countless major British companies, irrespective of the leader of the nation. This, it appears, even applies when international companies have major debt issues. After all, SoftBank recently shored up the financial standing of this company by selling a major stake in Alibaba. Despite this, the debt interest of SoftBank remains alarmingly high. Therefore, why is such a risk being taken given the importance of ARM and the debt reality of Softbank?





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