34 2GM Tuesday September 15 2020 | the times
Business
Jensen Huang, who has had the Nvidia logo tattooed on his arm, promised that
1
Simon Coveney, Ireland’s
foreign minister, has said that a
trade deal between Britain and
the European Union is still
possible and that the threat by
Boris Johnson’s government to
suspend key elements of the
Northern Ireland protocol in the
Withdrawal Treaty is a negotiating
tactic. Liz Truss, the trade
secretary, has denied that
negotiations with the United
States are faltering amid warnings
from Democrats that they could
veto a trade deal. Page 72
Hundreds of millions of cider
apples will be left to rot as
farmers and drinks makers try
to recover from the impact of
coronavirus. Since lockdown, cider
consumption has fallen heavily,
with Britons drinking more than
half a million fewer litres a week,
according to Nielsen, the market
research company. Page 123
G4S, the world’s largest
security firm, has come under
a hostile takeover attack from
Gardaworld, a much smaller rival.
The Canadian multinational,
controlled by BC Partners, the
private equity firm, has made an
all-cash £2.96 billion offer for G4S,
having had three approaches in
the summer rebuffed. Pages 33, 364
TikTok’s fate in America is
closer to being decided after
its Chinese owners submitted
a proposal to the Trump
administration that involves
partnering with Oracle, the
software provider. Bytedance, the
owner of TikTok, rejected a bid
for its US operations from
Microsoft and went for the
underdog. Page 335
The workforce of Arm
Holdings will receive windfalls
averaging £176,000 after the
$40 billion sale of the chip
designer to Nvidia, of the United
States, is completed. Page 336
Nikola, the electric lorry
maker, has admitted filming
one of its lorries rolling
downhill without an engine two
years ago in a marketing video, as
Hindenburg Research, an
American short-seller, claimed lastweek. Pages 33, 35
7
A vote today on a vital
restructuring for New Look is
on a knife-edge as a host of
the fashion retailer’s biggest
landlords plan to object to the
proposals.8
BP has joined calls to bring
forward a ban on sales of new
petrol and diesel cars in
Britain. The company said that the
ban “can, and should, be brought
in sooner than 2040”, which is the
present target. Page 399
According to Personal Group,
a specialist insurer, the focus
on key workers, plus the value
now being put on health and
welfare, is likely to prompt
companies to offer benefits to
workers on lower pay and even to
those on temporary contracts.
Page 4010
Abcam, a British
biotechnology company, is
to press ahead with its
five-year growth plan, despite the
Covid-19 pandemic, and has
confirmed that it is scrapping itsfinal dividend. Page 41
Need to know
Landlords put New Look’s plans on ‘knife-edge’
A vote today on a vital restructuring for
New Look is on a knife-edge as a host of
the retailer’s biggest landlords plan to
object to the proposals.
British Land, owner of the Meadow-
hall shopping centre in Sheffield, and
Newriver Reit are among the property
owners intending to oppose the pro-
posed company voluntary arrange-
ment. Hammerson, the owner of Bir-
mingham’s Bullring, and Land Securi-
ties are also intending to vote against
the restructuring, Sky News reported.
Together the landlords own about 55 of
New Look’s 490 UK store sites.
New Look’s hedge fund owners have
said that they will inject £40 million
into the business through a debt-for-
equity swap. However, the funding is
contingent on switching New Look’sshops to turnover-linked rent. Property
owners would accept no rent for three
years on 68 stores and as little as 2 per
cent of turnover on 402 others. A CVA
— a controversial type of insolvency
arrangement involving rent cuts or site
closures — requires the approval of
75 per cent of creditors.
A source close to the restructuring
said that the vote was on a “knife edge”.
New Look has contacted its 11,200 staff
and suppliers to urge them to exercise
their right as creditors to vote. The CVA
would be the second restructuring of
New Look’s store estate in three years.
It is understood that New Look needs
more than half of its 350 landlords to
back the idea.
The fashion retailer was founded in
1969 in Taunton, Somerset. It was
acquired by Brait, a South African
investor, for £780 million in 2015. Two
years later Brait wrote down the valueof its investment to zero and sought
further private equity backing.
New Look has said that the rent cuts
are an “absolute necessity” to safeguard
jobs after the pandemic forced the clo-
sure of its stores. Shopper visits sincethe reopening of stores have been
40 per cent below last year.
It is understood that some landlords
are resisting the plan amid fears that it
could inspire other retailers that have
deferred rent payments during the pan-
demic to tear up their contracts.
Melanie Leech, chief executive of the
British Property Federation, has con-demned the use of CVAs as a “weapon
by solvent businesses in boardroom
negotiations to rip up leases perma-
nently... Many property owners and
tenants have already agreed on turn-
over-based rents and have not needed
to undertake a CVA to achieve this.”
A New Look spokesman said: “Our
proposed CVA and consequential re-
capitalisation transaction — which
involves a material reduction of debt,
extension of the company’s banking
facilities and a cash investment of
£40 million — represents the best out-
come for all stakeholders, including
employees, suppliers, landlords and all
other creditors.” He said that the retailer
had made changes to its initial proposal
after receiving “constructive feedback”
from landlords. It had introduced “en-
hanced landlord break clauses”, “un-
changed service charges” and “mini-
mum rent levels”, he said.Louisa Clarence-Smith
Ashley ArmstrongRivals flex
muscles as
Arm changes
hands again
For the second time in only four, short
years, the company lauded as the
champion of Britain’s technology
industry is less a global heavyweight
contender than a prize being passed
from one even bigger hitter to another.
Four years ago, Arm Holdings was
acquired by Softbank for £24 billion.
The giant Japanese conglomerate and
investor landed its knockout blow amid
the chaotic aftermath of the Brexit
referendum, capitalising on a slump in
the pound. Now, however, Softbank is
reeling itself, left dizzy by a string of
soured investments and selling assets
to reduce its debts.
So Jensen Huang is taking his turn to
flex his muscles. The founder of Nvidia,
the American semiconductor power-
house, is gladly helping Softbank to
keep its creditors from the door, paying
as much as $40 billion in cash and
shares for the British company, whose
designs have been used in 180 billion
chips since it was founded thirty years
ago — making Arm the only Brit-
ish technology
company with
such global
reach.
For Mr Hu-
ang, 57, the price
tag is a snip.
Nvidia’s share price
rose by 6.5 per cent
yesterday and
since word
of the take-
over talks
first leakedin late July, it has added $60 billion to its
market value. Nvidia is buying the
crown of Britain’s technology industry
for less than six weeks’ worth of stock
market gains.
The takeover has raised inevitable
concerns over Arm’s domestic opera-
tions and will revive a decades-old de-
bate as to why Britain, with its world-
class universities, has created so few
high-tech companies of worldwide
standing. Arm is one of only a handful
to have scaled such heights. Founded in
1990 as a spin-off from Acorn Comput-
ers, the microprocessors it designs con-
trol everything from connected kettles
to heart monitors — but its mainstay is
the market for smartphones and tablet
computers, where its energy-efficient
chips dominate.
Arm has prospered thanks to a Swiss-
style business model, under which it
supplies its intellectual property to any
semiconductor maker prepared to pay.
Because it licensed the technology at a
relatively low price, its designs became
the industry standard.
Its success helped to turn Cambridge
into a technology cluster that became
known as “Silicon Fen”, a nod to its
standing on a global stage cominated by
Silicon Valley. Of the 6,500 people that
Arm employs globally, 3,000 are based
in Britain. Unions, politicians and
former investors have voiced fears that
these high-
ly paid jobs
could dis-
appear under
its new owner.
Mr Huang has
insisted that
Arm’s headquar-
ters will remain in
Cambridge and that
the workforce will grow.
“Headcount numbers will goup,” he told The Times, though he
declined to specify by how much. He
promised to build a new research
centre to develop artificial intelligence,
but again did not specify how much
Nvidia would invest in this facility.
Prospect, the union, described the
takeover as a “worrying development”
and called for the government to im-
pose “binding conditions” on Nvidia to
preserve employment. Ed Miliband,
the shadow business secretary, said that
the government would be “derelict in
its duty” if it failed to secure legally
binding pledges on jobs.
The memory of Nvidia’s last acquisi-tion lingers — in 2011, it bought Icera, a
Bristol-based semiconductor maker,
for $367 million in cash, only to shut the
company four years later — but Mr
Huang insisted that the “circumstances
are fundamentally different”. Arm, he
said, was an established powerhouse,
while Icera was a start-up haemor-
rhaging cash. “They were going out of
business. I invested hundreds of mil-
lions of dollars and in the end it didn’t
work out.” This time, Nvidia would
work with ministers to “put in place a
framework that addresses whatever
concerns they have”, he said.
Mr Huang wants to become the mainNvidia, once a similar-
sized peer of the British
technology group, has
become its latest owner,
reports Simon Duke
Masayoshi Son, the head of
Softbank, is offloading assets68
Number of New Look stores that would
pay no rent for three years