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Great British research universities are brilliant at creating innovative technology companies.
Darktrace chief executive Poppy Gustafsson told the CBI 18 months ago that the cybersecurity company she set up benefits “hugely” from being in the UK and wants to be a “flagbearer” for British technology.
It has taken a 20 per cent premium to the current market price and the ability to personally withdraw £24m now for the tech entrepreneur to drop the flag.
The company will be bought by US private equity group Thoma Bravo, valued at more than £100bn.
If Gustafasson were more serious about backing UK cyber, she and her colleagues would not have so gladly accepted the current £4.3bn offer.
Don’t hold your breath: if there was ever a case for implementing the UK National Security and Investment Act, this should be it
Considering the relatively weak valuation of sterling against the dollar and the discount of London’s share price to New York, surrender makes little sense.
It’s not just Darktrace that is betrayed, but the entire Cambridge ecosystem.
Corporate champions do not arise by chance. They are the result of detailed academic work, government R&D support, and largely taxpayer-funded education. Buyer Thoma Bravo is making all the usual noises about a commitment to the UK. If Darktrace joins cybersecurity companies on the other side of the Atlantic, it is difficult to imagine that its integrity, patents and intellectual property will remain very British.
You only have to look at the way Arm Holdings, another Cambridge emigre, has transformed itself into an £80bn giant in the US (with most of the increase going to Softbank) to recognize how easily loses orientation when top executives change address.
Other Cambridge sell-offs include software champion Aveva, now part of France’s Schneider, and Mike Lynch’s Autonomy. How different life would have been for Lynch, on trial in San Francisco, if he had not so quickly accepted Hewlett Packard’s shilling. He will receive £300m from his family’s main holding in Darktrace.
As private equity boss, Darktrace’s independent chairman Gordon Hurst might not have been the best person to show resistance. There is also no shortage of British investors for long to put up a fight. The L&G Cyber Security exchange-traded fund, at 3.64 per cent, is the only British name in Darktrace’s top ten institutional holders.
If there was ever a case for implementing the UK National Security and Investment Act, this should be it. Don’t hold your breath.
copper fingers
Most offer rejections are done for price reasons. Anglo American’s rebuttal to Australian giant BHP’s £31.1bn approach is much more.
The deal is too complicated given the requirement for Anglo to divest its stakes in two listed subsidiaries.
The real obstacles are political and economic. South Africa has strong historical ties with Anglo American and politicians there have quickly taken to the barricades. In the past, the company’s president, Stuart Chambers, was not very firm about offers.
The sale of Arm Holdings, where he was chairman, to Softbank’s Masayoshi Son has been humiliating for Chambers and Theresa May’s government, which accepted the deal. It is an experience that will not be repeated at Anglo-American.
small steps
There may not be a better time for a NatWest retail offering.
Despite cost-of-living pressures and rising mortgage bills, the bank’s bad debt provisions were lower than expected. Profits fell to £1.3bn from £1.8bn in the first quarter.
Mortgage approvals are taking off after falling in the first quarter. Economic activity in almost all regions of the country is recovering. New boss Paul Thwaite believes the political shadow cast by the closure of Nigel Farage Coutts’ account is over. More sensitive is Thwaite’s refusal to stop branch closures while the bank touts digital banking.
Thwaite recognizes the need to improve services, especially for NatWest’s legions of small business customers. That’s an improvement.
