Sir Robin Saxby, Chairman of Arm Holdings: The teenage TV repairman who moved on to £500m takeovers

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The Independent Online

ALL THIS week Sir Robin Saxby, the chairman of ARM Holdings, the Cambridge-based semiconductor company, has been charging up and down between Aylesbury Crown Court and the City of London. Aylesbury because he has been on jury service and the City because, on Monday, he announced the surprise £504m takeover of the US group Artisan Components.

ALL THIS week Sir Robin Saxby, the chairman of ARM Holdings, the Cambridge-based semiconductor company, has been charging up and down between Aylesbury Crown Court and the City of London. Aylesbury because he has been on jury service and the City because, on Monday, he announced the surprise £504m takeover of the US group Artisan Components.

Whether he helped send any criminals to jail this week is not known. However, the jury is certainly still out on his takeover bid, and he and his chief executive, Warren East, have found few expert witnesses willing to help defend their actions.

Scampering in and out of court cannot have been the best preparation for unveiling a near $1bn foray into Silicon Valley, especially as news of the deal sent ARM's shares crashing more than 18 per cent, wiping £180m off the company's value, as shareholders tried to make sense of the price and the logic of the sudden move.

"Nobody like surprises," Sir Robin says. "The immediate reaction is 'Oh my God, what are they doing?' Our advisers did tell us our shares would tank." And tank they certainly did. But, says Sir Robin, deals are like buying and selling football players. "If you get a star player in the transfer market then they cost a lot of money. If you get a reject they don't. The reality is that a good business is worth paying a premium for."

As Sir Robin is a Liverpool fan his shareholders can only hope that he and his management team show more acumen for buying assets than some of the deals seen at Anfield in recent years.

However, he is unrepentant. "This is the first large acquisition opportunity we've had that can strategically change the landscape of the industry, which is good for both companies."

Sir Robin is the sort of businessman loved by Labour. A favourite of the Treasury, he shares speaking platforms with Gordon Brown and is a crusader for a more entrepreneurial Britain. He is a visiting professor at Liverpool University, where he studied electronics in the Sixties, and is eager to state his Labour credentials.

"I'm not Cambridge or Oxford. I've always liked music and football. I went to Liverpool in the Sixties because it was the most exciting place in the UK. I'm from a working class background, I went to a grammar school, I wasn't good enough for Oxford."

A slight chip - not the semiconductor kind - starts to appear. He also gives the impression of not being entirely comfortable with his status as chairman of the board, having been a hands-on chief executive, as well as chairman, until 2001 when he split the roles.

"When I became chairman one of the non-executives said, 'You have to let the new chief executive make his own mistakes'. I think that's very important. I've been through that with Warren. The challenge for me is when should I be involved and when not. I don't want to be in the way but I want to be around."

Lured to the American giant Motorola at the age of 27 - "they offered me a white Cortina 2000 GXL with black upholstery" - he worked for a succession of technology companies before co-founding ARM in 1990 with backing from Apple.

But while the donnish senior common rooms of Oxbridge colleges are not for Sir Robin, the City has also proved an awkward place for him at times.

Two years ago there was another nasty surprise for ARM shareholders when the company announced a profit warning, sending the shares down 60 per cent and wiping £800m off the value of the company. Its communication skills, or lack of them, were attacked that time, and Sir Robin found himself on the defensive again on Monday.

The timing of the Artisan announcement to the US and UK stock markets was out of his hands because of the bundles of red tape that surround any big deal - even his brokers were in the dark until the last moment - and frankly, Sir Robin says, investors should not have been that shocked had they been paying closer attention in class in recent months.

"We haven't done a big acquisition before but I would say it's pretty obvious that perhaps we were thinking about a large acquisition because we've been sitting on a large amount of cash for some time," he says.

So tut-tut to all you analysts and shareholders taken aback by ARM's biggest deal in its six-year stock market history. Sir Robin reckons he just cannot win. "At 9pm every night we have a conference call between us and our advisers and Artisan's management and advisers. We compare notes. We are getting beaten up here for paying too much, and they are getting beaten up over there because we are paying too little. As we've started to explain the logic of the deal they [the shareholders] are starting to get it."

So what is the logic exactly?

ARM is a world leader in designing the tiny, unimaginably intricate software systems that go on the microprocessors embedded in mobile phones, laptops, and every other device you can think of.

Artisan supplies the unimaginably small components, such as a microchip's memory, that complete a microprocessor's gadgetry. Electronics manufacturers license the technology and apply it to the chips that make their devices work. Merge the two companies and you grab a bigger share of the royalty income paid every time a mobile phone or computer games console is sold. But the Artisan merger does not come with substantial cost savings, the companies' respective sales forces will be largely intact, and because there is little overlap on the manufacturing side there is no fat to trim there either.

However, being technology companies, there is a lot of science involved too and this is where Sir Robin hopes the takeover will pay for itself.

The challenge is to design smaller and smaller microprocessors with greater computing ability but that are cost effective and do not simply waste power by turning it into heat. This is where you need to start understanding terms such as "millions of instructions per second per dollar" if you want to get on in the microchip business.

Anyway, the technology of Artisan and ARM working together can better solve the problem, Sir Robin reckons.

"I started out designing chips made by Plessey for television sets in 1968 [he had a television and radio repair business aged 13]. The chips had 50 transistors on them. I knew each one personally. Now you are looking at chips with 1 billion transistors on them. By putting these two companies together, which is a bold step, we can accelerate our future growth."

The two companies have already been working together on a technology called "intelligent energy management" which will be used in the mobile phones that you and I start buying in about four years.

"We make the building blocks to allow the design of better, faster chips. We have a similar vision and a similar culture. We haven't bought this company to shut it down. We want to proliferate its technology. They want their technology to be part of every digital product and so do we," Sir Robin says.

Arm and the man

Age: 57

Pay: £236,348 plus 2 per cent of ARM Holdings worth about £16.4m and 170,000 share options, according to the last report and accounts

Education: Chesterfield Boys Grammar and Liverpool University

Career:Before ARM was founded in 1990, Sir Robin worked for Henderson Security Systems and Motorola Semiconductors. Latterly he was vice-president, Northern Europe, of European Silicon Structures. He was knighted in the 2002 New Year Honours list for services to the information technology industry.

Personal life: Married with two grown-up children

Hobbies: Skiing in Switzerland - and electronics

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