The proposed $40 billion takeover of British chip designer ARM by US technology company Nvidia, originally launched 15 months ago, has suffered another setback with news of a new, six-month investigation by the Competition and Markets Authority into the consequences of the sale.
Cabinet member Nadine Dorries, whose remit includes digital, finally pressed for this further delay to assess the impact on national security – more than a year after ARM founder Herman Hauser gave evidence about the threat to national security to the House of Commons select committee on foreign affairs. More than a year, too, since the Conservative chair of the committee said the takeover raised questions of national security.
Hopefully, this represents a change of heart for the British government. But don’t count on it.
Up to now the government has hailed foreign buyers snapping up British businesses as good for the economy, when in fact the opposite is true. Making a car boot sale of Britain puts our future in the hands of speculators who will proceed to carve up companies for quick money.
The sale in November of the supermarket chain Morrisons to the American private equity company Clayton, Dubilier and Rice is one of the latest in a long line of such reckless abandonment of national assets. The consequences will quickly become apparent.
Despite the American company’s weasel words about “…protecting the fundamental character of Morrisons, and being a responsible, thoughtful and careful owner”, a financial scheme is being put together which will instantly double Morrisons’ debts.
The ensuing sale of parts of the business and cost cutting elsewhere will hit hard. Morrisons needs to be viewed as a national asset because the people who work there are British, the people who shop there are British, and a significant part of our food supply industry – farmers, bakers and others – keep the shelves stocked. They are the ones who will pay the price of the debt and asset stripping.
On the face of it ARM and Morrisons have little in common other than that they are large and profitable. But the takeovers show another common thread: the pernicious role of private equity companies. ARM is currently owned by one. Morrisons is targeted by another.
As our feature on page 6 shows, private equity has displaced shareholder capital as the preferred vehicle of global finance. These companies, armed with control over $7 trillion in company assets, seek to rule the world. The concept of a national asset is completely alien to them. So is the concept of the long term: they typically sell companies they buy in less than 4.5 years.
If we want to stand on our own two feet as a modern, independent manufacturing nation, we will have to hold on to what is precious to us.
• This is an updated version of the editorial Finally, an investigation into the ARM takeover