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Imagination Technologies agrees to Chinese buy-out; sells MIPS business

Well, that's all three British chip design champions gone into foreign ownership: ARM, Imagination and Wolfson
Apple iPhones
Apple stuck a dagger into the heart of Imagination's business

The take-out price for up-for-sale computer chip designer Imagination Technologies Group PLC (LON:IMG) has been agreed at 182p per share.

The buyer is Canyon Bridge Capital Partners, a buy-out fund backed by China that last week was prevented from buying Lattice Semiconductor Corp (NASDAQ:LSCC) on national security grounds.

READ: Imagination Technologies shares gain on reports China-backed fund is closing in on bid

The terms value Imagination at around £550mln.

The news, announced late on Friday after the London market closed, sent the shares soaring 36% to 174.35p, helped by news this morning that the British company had agreed to sell its MIPS central processing unit (CPU) business for US$65mln in cash.

Imagination bought MIPS for US$60mln in late 2012. It is being sold to Tallwood, a venture capital firm based in Silicon Valley.

Imagination’s graphics chip technology is at the heart of many mobile devices but the company was dealt a crippling blow in April this year when Apple Inc (NASDAQ:AAPL) said it planned to stop using Imagination’s intellectual property in its products, as it had developed its own graphics intellectual property that it claimed was even better than Imagination’s.

READ: Imagination Technologies as cheap as chips after Apple shakes it to its core

Imagination was dubious, to put it mildly, that Apple could design its own graphics chips to the required specification without infringing Imagination’s patents, and asked, unsuccessfully, for further information about Apple’s designs.

Recognising it was unlikely to win a legal battle with arguably the world’s richest company, Imagination bowed to the inevitable and put itself up for sale.

Canyon Bridge, which ultimately is funded by the Chinese government, has been the most likely buyer for some time.

Intriguingly, one party that expressed an interest in buying Imagination has not yet confirmed whether it is still interested in buying the company.

READ: SoftBank bid for ARM Holdings paves way for more overseas takeovers

Imagination is the third of Britain’s ground-breaking chip design companies to fall into foreign ownership this decade.

ARM Holdings was taken over last year by Japanese technology company SoftBank, while sound chip specialist Wolfson Microelectronics was acquired in 2014 by US firm Cirrus Logic.

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Imagination Technologies Group Timeline

September 17 2014

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