ARM Holdings is a UK high-tech company founded in Cambridge about twenty-five years ago. They design widgets, tiny widgets, called microchips, even smaller than the ones we eat when dieting. Some readers have been shareholders, not me. I couldn’t because it broke two of my investment rules: I didn’t understand their business model and the shares traded on too high an earnings multiple. Now, last weekend, a Japanese company has bought them.
Oh woe! Another jewel in the British crown falls into the hands of Johnny foreigner? Yes, but he has paid high wide and handsome and has promised to double the workforce in the next five years – although he may have his fingers crossed. There may be pressure on the Prime Minister to block this deal. She should do no such thing. Although I don’t have a clue how to design a microchip I’m confident that they have mastered it at ARM. I’m also confident that if they don’t get on with their new owners they will set up a new business in which, this time, I might become a shareholder.
ARM isn’t like a conventional business. It relies entirely on the braininess of its employees. They are mobile. They can start again under a new name and design new microchips. I think the shareholders in SoftBank may think the same as they seem to be getting cold feet over paying about £24 billion for a bunch of brain-boxes who might jump ship.
Talking of feet …