Yet with question marks over SoftBank’s finances, which Mr Bearbull discusses on page 18, there are worries that this promised expansion will never materialise. Is it legally possible to enforce any promises an acquirer may make in the heat of a takeover battle? Probably not. Kraft’s chief executive, Irene Rosenfeld, made similar promises when the US food giant took over Cadbury in 2009, only to shutter its Somerdale factory and shift production to Poland within a few years – as had been feared as the controversial takeover battle gathered momentum. There were calls at the time for the government to step in and block the acquisition in the national interest, and those calls are being made again in the case of Arm – or at least to somehow legally ensure that its promised investment in the UK comes to pass.
I have said it before, but I am no fan of this kind of protectionism, which other countries, notably France, have often tried with limited success – look no further than Alcatel for a painful recent example. Safe in the knowledge that they have a buffer from competition, or prevented from readjusting their business to cope with it, such businesses will slip into ungainly bureaucracy and crowd out the space into which innovative new companies can emerge. It is certainly not good for investors.
Arm, of course, was one of these innovative companies – and it is notable that its former chief executive, Warren East, has gone to another British champion, protected by government and in need of untangling its own bureaucracy: Rolls-Royce. In fact, Arm’s own history makes a case for limiting the hand of government in running industry – its technology emerged from the ashes of home computing pioneers Acorn computers, itself born out of ZX Spectrum-maker Sinclair Research, which owed its birth to a falling out between its founder, Sir Clive Sinclair, and the government’s National Enterprise Board, Harold Wilson’s ultimately unsuccessful attempt at state-controlled capitalism.
Indeed, while it is certainly the government’s job to create the fiscal conditions in which industry can thrive, or at a grass roots level build an education system to deliver the skilled workers companies like Arm require, it should not attempt to control the direction in which it proceeds. That, like it or not, is the market’s job.
