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Here's why some people aren't happy that the UK's biggest tech company is being sold for £24 billion

Jul 18, 2016, 15:03 IST

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Albert Gea / Reuters

It's no secret that the UK is yet to build a tech company the size of Google, Facebook, or Amazon, which is why some people may have been disappointed when they woke up on Monday to the news that the nation is about to lose its biggest tech company to a Japanese tech giant.

For those not already up to speed, Cambridge-headquartered chip designer ARM Holdings is being acquired by Softbank for around £24 billion. The company was founded in 1990 and its chips are used in hundreds of millions of mobile phones worldwide.

No doubt many of ARM's shareholders will be delighted by the news that Softbank intends to pay £17 a share for ARM - 43% more than ARM's closing share price on Friday and 41% more than ARM's all-time high closing share price.

But those holding out for a $100 billion UK tech success story - including certain government ministers and people at the core of the UK tech community - will likely see the news as a kick in the teeth and another example of a UK tech champion being taken out by overseas competition. After all, companies on this magnitude give an enormous boost to the GDP of the economy they're headquartered in, as well as a relatively smaller boost to the economies they expand into.

In the last few years, many of the UK's best tech companies have been preyed on by the world's biggest tech companies. AI research lab DeepMind was acquired by Google for £400 million, social media startup Tweetdeck was bought by Twitter for around £25 million, smartphone keyboard software firm SwiftKey was bought by Microsoft for £174 million, and Autonomy was bought by HP for around £8 billion.

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"We are getting pretty good at building tech firms to a certain level - but then sell up rather than hang in or buy others," wrote BBC journalist Rory Cellan-Jones on Twitter, summarising the point nicely.

The founder of ARM, Hermann Hauser, told the BBC that the deal was a "sad day" for the British technology sector.

Harry Briggs, a London-based venture capitalist at BGF Ventures, wrote on Twitter that he was "sad to lose our greatest UK technology company and a true world leader."

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But new Chancellor Phillip Hammond endorsed the sale in a statement that reads: "Just three weeks after the referendum decision, it shows that Britain has lost none of its allure to international investors. Britain is open for business - and open to foreign investment."

He added: "Softbank's decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth. And as ARM's founders will testify, this is the greatest place in the world to start and grow a technology business."

The UK's new Digital Minister Matt Hancock was also quick to welcome the news, writing on Twitter: "The proposed investment of £24bn in ARM by Softbank highlights Britain's capability to grow & build world-beating Tech companies."

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