ARM single-handedly lifts FTSE

Added 18th July 2016

A 42% rise in ARM Holdings shares to 1699.5p lifted an otherwise lacklustre FTSE 100 into positive territory on Monday.

ARM single-handedly lifts FTSE

The index was up 26 points to 6695 by mid-morning.

The leap in the iphone chip supplier’s shares was triggered by a £24bn takeover offer from Japanese telecoms company SoftBank. The offer represents a 43% premium to ARM’s share price of 1189p before the announcement.

Notably the offer for Britain’s biggest tech company was made after the Brexit vote, ARM said.

This suggests that SoftBank was to some degree acting opportunistically to take advantage of the fall in the pound, and also that it does not view Brexit as a significant issue for ARM as a business.   

Baillie Gifford is the top shareholder in ARM by a distance with 9.5% of the company and is therefore set for a windfall. According to FE Analytics other big holders include the Alliance Trust Sustainable Future UK and UK Ethical funds, which hold 4.1% and 4.7% respectively, while Majedie Global Focus holds 3.8% and SLI UK Opportunities has 3.2% 

Other major shareholders include the leading FTSE 100 tracker suppliers such as LGIM and BlackRock.   

“The FTSE 100 has been ‘strong-ARMed’ into positive territory this morning thanks to M&A activity, and without this the index would be just in negative territory,” said IG market analyst Chris Beauchamp. “The weekend was dominated by news of the coup in Turkey, but so far the impact seems to be limited outside of emerging market assets.”

“It would not be surprising to see other bids for UK firms that have now become cheaper thanks to the fall in sterling, so the ARM deal could simply be the first in a procession of deals,” continued Beauchamp. “It won’t be an ugly rush, since ongoing political uncertainty will make it even more important for acquisitive firms to pick their targets carefully, and questions will linger over just how protectionist the UK may become with regards to some of its prized assets. Nonetheless, as a sign of confidence, the deal is very welcome indeed.”

Elsewhere across the FTSE 100, the major miners Rio Tinto, Anglo American and BHP Billiton all saw shares falling between 2% and 3% on fresh concerns over global commodities demand.  

While everything was outshined by ARM, a number of financials such as Royal Bank of Scotland and house builders like Taylor Wimpey were in positive territory on improving sentiment on the UK economy.

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Alex Sebastian

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Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.



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