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UK govt considers invoking national security in Arm IPO saga

Reportedly dropping hints it may use legislation to push a London listing

The UK government is upping the ante in attempts to have Arm listed on the London stock exchange, with reports suggesting it is considering the threat of national security laws to force the issue with owner SoftBank.

According to the Financial Times, the British administration is considering whether to apply the National Security and Investment Act (NSIA), which came into force at the start of the year, in a bid to have SoftBank change its mind over listing Arm exclusively on the Nasdaq in New York, as it has previously indicated.

The FT cites the usual "people familiar with the matter", who indicated there had not yet been a formal debate over using national security legislation, and the idea was opposed by some government officials.

Nevertheless, the news that using the NSIA has even been discussed shows the government is determined to have Arm listed in London, perhaps because the chip designer is still seen as a global technology success for Britain, despite the government allowing it to be sold to Japan's SoftBank in 2016.

Potential of layoffs

However, Arm's listing in New York could have consequences for UK workers, as it could lead to the chip designer transferring its headquarters to the US from Cambridge in the UK.

Arm is already cutting one in 10 jobs in the UK division, believed to be about 350 roles, as part of a global restructuring thought to involve the loss of about 1,000 positions ahead of the IPO.

A senior source close to the company previously told us that more layoffs at the company's headquarters would be likely if the IPO goes ahead in the US as planned.

"If Arm lists on the Nasdaq or the Dow Jones there is a requirement to move the HQ to the USA," the source told us.

Last week, we reported that the UK minister for Technology and the Digital Economy Chris Philp had said the government was "working closely with" Arm management on the IPO process, and that many companies have previously launched with a dual listing in both the UK and US.

Arm was itself dual-listed before its sale to SoftBank, with the London Stock Exchange as its primary location and secondary stock held in New York.

The Register asked Arm and SoftBank for their views regarding the threat of invoking NSIA, but neither company had responded at the time of publication. If we receive any response, we will update accordingly.

Although the NSIA only came into force at the start of the year, it has already been used in at least two cases involving technology companies; an assessment has been called on the investment in Brit mega telco BT by French telco tycoon Patrick Drahi, who upped his stake to 18 percent late last year, making him the largest current shareholder in BT Group via his Altice UK investment vehicle.

Another security assessment is underway into Newport Wafer Fab's acquisition by China-controlled entity Nexperia last year. Although this deal has already closed, the Act may allow the government to undo the sale if it believes there are national security grounds for doing so.

The UK government also previously intervened in SoftBank's planned sale of Arm to Nvidia, referring the deal to the nation's Competition and Markets Authority last year over fears that it might stifle competition in the chip market where chip designer Arm is seen as a neutral player.

Scrutiny such as this, and from other regulatory bodies in the EU, US and China, were cited as reasons for the sale falling through and SoftBank deciding to float Arm on the stock market instead. ®

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