Britain Arm-listing twisting would look desperate

2 minute read

An ARM and SoftBank Group branded board is displayed at a news conference in London, Britain July 18, 2016. REUTERS/Neil Hall

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LONDON, June 22 (Reuters Breakingviews) - Britain desperately needs a quick win to show it is open to business after Brexit, but using takeover rules to force a listing of chipmaker Arm in London, as suggested by the Financial Times, would be a costly distraction.

SoftBank Group (9984.T) is preparing to float its UK-headquartered company at a hoped-for $60 billion price tag, with boss Masayoshi Son expressing his preference to list it in New York. After months of lobbying, the FT says the UK government has discussed using the new National Security and Investment Act, which allows it to block takeovers, to persuade Son to list the chip design group in London instead.

That looks hard to pull off. The act is supposed to control takeovers, not IPOs. The government might use the act to prevent anyone buying a large stake in Arm during or after the listing, but that would be illogical: Arm will still be controlled by SoftBank, and U.S. institutional shareholders hardly constitute a security threat.

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Any such action would send a red flag to business that the government is willing to use takeover rules in egregious ways to suit its political ends. Given Britain’s dismal investment record, that’s the last thing Prime Minister Boris Johnson needs. (By Karen Kwok)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Neil Unmack and Streisand Neto

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