11 April, 2017 - 11:22 By Tony Quested

$32bn Japanese takeover of ARM good: £74m Chinese acquisition of Sepura bad?

The UK government has refused to disclose why it is probing the proposed £74 million acquisition of Sepura by the Hytera Corporation of China, other than to raise that hoary old chestnut ‘public interest’ without expanding on how this private deal impacts on public interest.

Business Weekly asked the Department of Business, Energy and Industrial Strategy to rationalise why it would put the deal at risk by ordering an inquiry.

Why probe this deal when the PM had nodded through the $32 billion acquisition of ARM by SoftBank of Japan last winter despite a loud and prolonged outcry from several respected businesses sources?

The reply we received was uninformative: “We have no further comment to make at this time.”

How it could hurt the UK for a cash-strapped Cambridge digital radio maker to be bailed out by a financially secure soulmate in Hytera defeats me. Especially considering the alternative.

I cannot see Hytera bothering to wait around for the UK government to wade through a sea of red tape. I believe the only reason they have waited this long to seal the deal is that a company that is quality to the core in terms of its technology is available at a knockdown price due to what should hopefully prove temporary cashflow difficulties.

Sepura is still selling strongly globally but in worldwide acquisition terms it is cheap as chips as a takeover target and, should it emerge with an alternative strategy which Sepura says it has on the table, the asking price would be significantly higher than £74m.

If it digs an alternative escape route, Sepura may yet be able to stand on its own two feet. That would depend on its current lenders and how long they would be prepared to delay delivery of covenant repayments. Post Brexit there is no certainty they would be prepared to wait much longer at all.

If Hytera then walks away would the UK government be happy to see Sepura slip out of business when it is supplying digital communications technology to some of the world’s leading companies and governments? Jobs and livelihoods in Cambridge are at stake here.

Sepura technology is improving safety at all modes of transport hub and public facilities – enhancing the fight against accident and even acts of terrorism.

It is improving the experience for and boosting the safety of spectators at World Cups and Olympic Games. It is flying the flag for a UK that is not exactly brimful of international technology standard bearers at present. Post Brexit we need all the class businesses we can lay our hands on.

As far as Business Weekly has been able to ascertain, several Chinese company takeovers of Cambridge businesses – not least the recent acquisition of successful online games company Jagex acquisition – have slipped through without Government concern.

The Sepura situation is an odd one and, in the circumstances, the Government should put its cards on the table and prove there are no jokers hidden in the hand.

There will be many more takeover bids for Cambridge and UK companies now Brexit has been triggered; probing every one of them on a whim and without a clearly stated upfront strategy could take this cluster – and this country – off the map as far as cash rich overseas investors are concerned.

We don’t say allow a free-for-all sale of our crown jewels; we do call for transparency and an equitable strategy across the business board.
 

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