“One of the sad and unintended consequences of Brexit,” said Arm Holdings’ founder Hermann Hauser yesterday after SoftBank lodged a £24.3bn offer for the UK listed chip designer, representing a 43% premium to last Friday’s close. Unfortunately for me, Hauser is a Remainer. If he were a Brexiteer then this would’ve been a lot more fun to write, but hey. Note also that none of ARM’s current board are complaining about the fact they’ll soon be millionaires (or even more of a millionaire if they already are one).

Brexit mumblings resurface…

It’s likely that people will moan about this loss of ‘sovereignty’ and independence, but that shouldn’t be a huge number. After all, those who voted to remain see ‘sovereignty’ as an outdated notion while those who voted to leave – you know, the ones who fought an entire campaign based on ‘taking back sovereignty’ –   aren’t allowed to complain because this is their doing.

In terms of the global financial markets, anyway, interdependence is key, not independence. We see every day how company results in the US have a read-across to UK sector peers so let’s not get hung up on sovereignty when it come to the markets. The benefits for the UK economy are there in this deal anyway: It will create jobs and see Arm Holdings retain its independence as an entity since SoftBank has absolutely nothing to do with chip architecture. ARM is the market leader in mobile chip technology and it makes great sense to let it get on with being just that. In fact, if there are any negatives, they’ll be almost exclusively confined to Japan.

Why didn’t you let us know about this last Friday?!

One might have argued that it was pointless for us to highlight the huge 43% move in Arm Holdings’ share price yesterday morning, after it had happened, yet the reason we did so anyway was more to remind everyone that predators could well be set to start feeding again en masse. Which other UK companies might awake one morning to find their share prices have soared by 50%? It’s time to be on the lookout.

There is a host of potentially attractive M&A targets that have suddenly become a bit cheaper and are yet to fall prey to a prowling predator. A weaker GBP and stronger USD means that now is an opportune time for  buyers to seek out some reasonably priced, market leading acquisitions.

While Big Pharma has been the sector of interest where M&A is concerned, government intervention on anit-trust grounds has mad eit difficult to execute. Perhaps more exciting is the media and telecoms  sector where consolidation has been rife in the last 12-months. There are still some big names in the likes of BT, Sky, Vodafone and ITV (all having benefited already on a read-across from the SoftBank / ARM deal) just waiting for a potential suitor. Could favourable FX translation make now an opportune time to pounce?

Watch this space!

Augustin Eden (Analyst), 19 Jul