By Atul Prakash and Kit Rees
LONDON (Reuters) - Britain's top equity index touched an 11-month closing high on Monday, boosted by a surge in shares of ARM Holdings after Japan's SoftBank Group agreed to buy the chip designer in a $32 billion (£24 billion) cash deal.
ARM (L:ARM), whose processor and graphics technology is used by tech giants like Apple (O:AAPL) and Samsung (KS:005830), spiked to a record peak, with its shares ending 40.9 percent higher following the announcement.
Analysts said the deal could lead to more mergers and acquisitions (M&A) in Britain. M&A activity in the country has slumped 68 percent to $63 billion so far this year from the corresponding period of last year, Thomson Reuters data showed.
"While it’s difficult to chalk this deal up to the Brexit vote, the falling pound does make some UK companies cheaper, and this takeover could act as the starting gun for more M&A activity," Hargreaves Lansdown (LON:HRGV) senior analyst Laith Khalaf said.
"ARM has been a great British success story, though it has been a key beneficiary of the global expansion of the smartphone market, driven of course by Apple. The future looks bright too, as mobile computing will grow for years to come."
Khalaf said that those who invested in ARM at the float in 1998 would have seen their 1,000 pounds turning into around 46,000 pounds as of Monday's close.
ARM helped the blue-chip FTSE 100 index (FTSE) to finish 0.4 percent up at 6,504.33 points, the highest closing level since August last year.
The index's gains were capped by a fall in travel stocks, which came under pressure after a failed coup in Turkey. Tour operator TUI (L:TUIT) fell 2 percent, while mid-cap Thomas Cook (L:TCG) dropped nearly 1 percent.
"It is just one thing after another, really. Every time you think the sector might be free of problems, then another one comes along," said Chris Beauchamp, senior analyst at IG.
"I think the fact that the coup didn't last very long, the fact you haven't got ... any further fighting will perhaps cushion the impact. But people will look at Turkey and think, 'Well, why don't I go elsewhere?'"
Basic resources stocks slipped on weaker metals prices. The UK mining index (FTNMX1770) fell 0.5 percent, dragged down by a 0.5 to 2 percent fall in BHP Billiton (L:BLT), Anglo American (L:AAL) and Antofagasta (L:ANTO).
The FTSE 100 index is up around 7 percent so far this year, having hit a year-high last Thursday. It has recovered 5.6 percent from a slump after Britain voted to leave the European Union on June 23.