Pioneering Trinity College in Cambridge is laying out the welcome mat to a new generation of entrepreneurs willing to build the next ARM-style technology great in the UK innovation cluster.

The inspiration behind Cambridge Science Park, Trinity says its new John Bradfield Centre could be the catalyst for the next ARM and the new Cambridge Phenomenon.

With local tech entrepreneurs mourning the decision by the superchip architect to sell to Japan group SoftBank for $31 billion, James Layfield _ CEO of Central Working, which is creating and running the Bradfield Centre – urges nextgen entrepreneurs to pick up the gauntlet.

He told Business Weekly: “The sale of ARM Holdings to Japan’s Softbank sent shockwaves through tech communities and the business pages. The thought of this British giant losing its independence to an overseas backer got many hot under the collar.

“Amongst all the angst and outrage, many asked whether tomorrow’s home-grown tech titans are safe from foreign takeovers. Yet surprisingly few were posing the more significant problem, in my opinion – are we doing enough to ensure we can grow tomorrow’s British giants?

“Today’s SMEs need an ideal environment to flourish. This naturally includes appropriate spaces and office facilities, but it also means a community and support.

“If we’re to discover the next ARM we need to bridge the gap between the education and business communities. In Cambridge, steps have been made to do just this.

“The Science Park is home to some of the most promising tech pioneers today and many are university alumni who maintain close working links with their former departments.

“With funding from central government, Trinity College will next year open the John Bradfield Centre here in Cambridge. As the UK’s largest innovation centre, it will provide a home for thousands of entrepreneurs, including a launch pad and home for Trinity alumni.

“Central Working has nurtured businesses as they transition from one employee to 30, from startup to SME. I’m proud to say that just last month, one of our members debuted their IPO on the New York Stock Exchange.

“It’s a bold move by Trinity College. Academia and business haven’t always been the closest of bedfellows, but I’m sure that forging closer links between the two will reap tremendous rewards for our young founders, who need all the help they can get if they’re to grow.

“Nurturing entrepreneurs as students while also connecting them to the local enterprise communities will bridge the gap between education and business.

ARM’s sale has come as a surprise to everyone, but I refuse to be morose about it. The sale of the business is testament to its huge success and shouldn’t be unexpected in today’s globalised world.

“I firmly believe that the impressive developments we’ve seen from UK start-ups in recent years barely scratches the surface of our country’s tech potential.

“Now is the time to provide that vital support to help these startups grow into giants – and we should allow our universities to play a key role in that evolution.”
 

ARM’s decision to agree a $31 billion takeover by Japanese business SoftBank smashed all kinds of records in terms of deals for the Cambridge UK science & technology cluster.
Without it, dealflow would have been modest even for a traditionally quiet July.

Thanks to ARM, July’s haul of just under $32bn took the value of transactions to $137.923bn in the 40 months of Business Weekly’s Cambridge Deals Digest – a monthly average of just over $3.51bn.

It was the first Deals Digest post-Brexit and reflected a clear slowdown in activity – rescued by the ARM-SoftBank extravaganza which continues to cause angst among Cambridge technology entrepreneurs.

CEO Simon Segars has offered the most cogent rationale for ARM deciding to sell at this point in its 25-year history. He says it will take billions of dollars of investment to achieve what ARM envisions to make the IoT an effective reality – and that SoftBank shares that commitment and vision.

One of Britain’s top bosses with a good handle on the Cambridge scene told me that besides handing ARM a growth war chest, the acquisition also protected the business not only from future trading vagaries but also against “another predator with malevolent intent.”

Hi-tech stole all the major deal headlines in July. Mike Lynch’s cyber security brainchild Darktrace was chief among these. Darktrace raised a fresh $65 million from global big hitters, including Samsung, to take its fundraising haul to $105.5m in 12 calendar months.

CEO Nicole Eagan told Business Weekly: “Demand for Darktrace is growing exponentially in every market and this latest funding will help us continue to grow the sales team to meet that international demand. “There will also be investment in the technology as threats become increasingly sophisticated and based on machine learning themselves.”

A long running deal that had been bubbling away on the back burner finally came to the boil as Jagex, the online games pioneer, accepted $300m from a consortium of Chinese investors including Shandong Hongda Mining Company. The new owners said the move would trigger a massive investment programme for the business as it stayed in Cambridge but pushed its reach internationally.

Cambridge communications technology business Sepura plc confirmed  a contract worth around $34 million for the New York City Transit project. Inkjet printing technology business Xaar plc made a key acquisition in the US that could stack up to $18.5 million.

It bought Engineered Printing Solutions in Vermont, a leading provider of product printing equipment in North America; it was the first acquisition in Xaar’s strategic vision to achieve £220 million of annual sales by 2020.

In the normally prolific life science sector locally, things were relatively quiet. Cambridge Medical Robotics, a private business developing a next-generation robotic system for universal keyhole surgery, secured $20.3 million in a Series A funding round from new investors. They included ABB Technology Ventures, LGT Global Invest and Cambridge Innovation Capital.

Sosei subsidiary Heptares Therapeutics earned a $10 million milestone payment from AstraZeneca after the first subject had been dosed with an immuno-oncology candidate from Heptares in a Phase 1 clinical study.

Not a done deal by any means but Sanofi, which owns Genzyme locally, increased its bid for US business Medivation to $10 billion from $9.3bn to trigger takeover talks; the parties are now deep in dialogue.
 

Cambridge is the testing ground for trials of new drone technology – to be used by US giant Amazon for delivery drops – in a pilot scheme backed by the UK government.

Seattle-headquartered Amazon says the partnership is exploring the steps needed to make the delivery of parcels by small drones a reality, allowing Amazon to trial new methods of testing its delivery systems under its Prime Air initiative.

It is understood that Amazon, which also owns Cambridge speech recognition company Evi based in a research lab in the city, has been trialling the drones in the local countryside.

A cross-government team is being supported by the UK Civil Aviation Authority (CAA); it has provided Amazon with permissions to explore three key innovations – beyond line of sight operations in rural and suburban areas, testing sensor performance to make sure the drones can identify and avoid obstacles, and flights where one person operates multiple highly-automated drones.

Paul Misener, Amazon’s VP of global innovation policy and communications, hailed the foresight of Whitehall. He said: “The UK is a leader in enabling drone innovation – we’ve been investing in Prime Air research and development here for quite some time. “This announcement strengthens our partnership with the UK and brings Amazon closer to our goal of using drones to safely deliver parcels in 30 minutes to customers in the UK and elsewhere around the world.”

This ground-breaking work will help Amazon and the Government understand how drones can be used safely and reliably in the logistics industry. It will also help identify what operating rules and safety regulations will be needed to help move the drone industry forward.

“Using small drones for the delivery of parcels will improve customer experience, create new jobs in a rapidly growing industry, and pioneer new sustainable delivery methods to meet future demand,” said Misener.

“The UK is charting a path forward for drone technology that will benefit consumers, industry and society.”

As the UK’s aviation safety regulator, the CAA will be fully involved in this work to explore the potential for safe use of drones beyond line of sight. The outcomes of these tests will help inform the development of future policy and regulation in this area.

“We want to enable the innovation that arises from the development of drone technology by safely integrating drones into the overall aviation system,” said Tim Johnson, CAA Policy Director. “These tests by Amazon will help inform our policy and future approach.”

Amazon says the drones would land on a company-branded square pad on a customer’s land. The logistics still have to be worked out and officially sanctioned.

SoftBank Group of Japan has promised to fund ongoing growth of ARM’s Cambridge HQ and double UK headcount in the next five years after the boards agreed a $31 billion (£24.3bn) cash takeover.

The acquisition now has to win court and shareholder approval – expected to be formalities, although it may be Q3 before the deal is completely done and dusted. 
SoftBank intends to delist ARM from the London and New York markets once the deal is ratified. The acquisition promises a multi-million dollar windfall for senior ARM directors who are significant shareholders.

It is the biggest transaction in the history of Cambridge – and European – technology.

The Japanese group says it is buying into Cambridge’s world-leading technology capabilities and will leave ARM as a stand-alone business within the group, run by the existing management teams, led by CEO Simon Segar.

Cambridge serial entrepreneur and investor Sherry Coutu is predicting that this might prove the first of many such post-Brexit swoops by global giants for Cambridge and UK businesses.

The yen and dollar – the currencies of the leading tech market players – have strengthened against sterling post-Brexit, Coutu points out. She also believes there is a micro-economic mission as Cambridge talent and innovation continues to excite global market leaders.

SoftBank, which invests in key areas of technology, says ARM can lead the world in realising the full potential of the Internet of Things.

For that reason it is paying ARM shareholders 1,700p per share – a premium of around 43 per cent to Friday’s closing price of 1,189p. ARM shareholders on the register of members as at close of business on September 8, 2016, will also be entitled to an interim dividend of 3.78p per share to be paid on October 10 – a move likely to spark a fresh stampede for stock on both sides of the Atlantic in the coming weeks.

Masayoshi Son, chairman and CEO of SoftBank, said ARM headcount outside the UK would also be scaled significantly: “We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market-leader in its field.

“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the Internet of Things.  
“This investment also marks our strong commitment to the UK and the competitive advantage provided by the deep pool of science and technology talent in Cambridge.

“As an integral part of the transaction, we intend to at least double the number of employees employed by ARM in the UK over the next five years. SoftBank intends to invest in ARM, support its management team, accelerate its strategy and allow it to fully realise its potential beyond what is possible as a publicly listed company.

“It is also intended that ARM will remain an independent business within SoftBank and continue to be headquartered in Cambridge, UK. This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward.”

ARM chairman Stuart Chambers added: “It is the view of the Board that this is a compelling offer for ARM Shareholders, which secures the delivery of future value today and in cash.

“The board is reassured that ARM will remain a very significant UK business and will continue to play a key role in the development of new technology. SoftBank has given assurances that it will invest considerably in the business, including doubling the UK headcount over the next five years and maintaining ARM’s unique culture and business model.

“ARM is an outstanding company with an exceptional track record of growth. The board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens.”

ARM celebrated its silver jubilee last November, having been founded in 1990. Its technology is embedded in more than 95 per cent of smart phones and over 30 per cent of all chips with processors sold worldwide in 2015.  Over 85 billion systems-on-chip have been shipped to date based on ARM’s technology.

ARM’s board noted that the terms of the acquisition imply an enterprise value multiple of approximately 24.4 times the company’s revenue for the year ending December 31, 2015 of £968.3 million and an equity value multiple of approximately 56.8 times adjusted profit after tax for the year of £428.9m.

Founded in 1981, SoftBank is one of the leading operators and investors in the global technology, Internet and wireless sectors. Its operating businesses consist of market leading companies in the advanced telecoms and consumer Internet sectors, including SoftBank Telecom, Sprint Corporation and Yahoo! Japan, as well as growing initiatives in robotics, clean energy and other emerging, technology-based industries. It is listed on the Tokyo Stock Exchange with a market capitalisation of JPY 6.9 trillion (£49.4bn). Headquartered in Tokyo, it has over 63,000 employees.

ARM is Cambridge’s greatest ever technology business and employs more than 4,000 people worldwide; it is in the process of building a new Cambridge headquarters. 
ARM was spun out of the iconic Acorn and supplies chips to all the world’s leading tech innovators, including Samsung, Apple and Huawei – all three of whom now have a Cambridge presence following acquisitions of their own.

The company has been tracked by US tech giants and arch rival Intel, as well as Apple, were believed to be interested.

Japan has a strong track record in building Cambridge businesses following acquisition. Brother Industries recently completed the integration of Cambridge inkjet printing company Domino; Toshiba has been a long-term investor in University IP and in life sciences, Takeda and Sosei have strong interests in the cluster.
 

Cambridge’s greatest ever technology business – chip architect ARM Holdings – is reportedly being sold to the Japanese for $31 billion (£23.4bn) – the largest deal in the UK cluster’s history by some distance and the biggest in European technology annals.

Global media were reporting overnight that the deal would be confirmed today with SoftBank Group the buyer. It is understood SoftBank wants ARM for a push into the Internet of Things arena in which the Cambridge company is a leading player.

ARM has enhanced that status with recent major acquisitions of its own and by rolling out new technologies in the segment as CEO Simon Segars looked to strengthen the group’s portfolio.

The company, which already employs 4,000 people globally, is in the process of building a new Cambridge headquarters. It is too early to ascertain SoftBank’s plans for the business which celebrated its 25th anniversary last year.

ARM was spun out of the iconic Acorn in Cambridge in November 1990 and supplies chips to all the world’s leading tech innovators, including Samsung, Apple and Huawei – all three of whom now have a Cambridge presence following acquisitions of their own.

The company has been tracked by US tech giants and arch rival Intel, as well as Apple, were believed to be interested.

SoftBank’s swoop for ARM may have been hastened by the UK’s Brexit vote which sent the pound tumbling to record lows and gave the yen a position of strength over sterling.

International media sources, including the Financial Times, are reporting that SoftBank has agreed to pay a massive premium to get ARM – reportedly £17 in cash for each share – a premium of more than 40 percent to Friday’s close.

Japanese based Brother Industries recently completed the integration of Cambridge inkjet printing company Domino and Takeda and Sosei have life science interests in the cluster.