Friday, 14 December, 2018

Imagination, MIPS to be sold to China-, California-connected VCs

Illustration by Alex Castro  The Verge Illustration by Alex Castro The Verge
Sherri Watson | 25 September, 2017, 08:20

Imagination Technologies Group Plc agreed to be acquired by China-backed private equity firm Canyon Bridge Capital Partners.

The all-cash 550 million pounds ($742.5 million) deal to buy Imagination Technologies is a clear sign that Canyon Bridge is continuing to pursue Western chip makers after its $1.3 billion deal to buy Lattice Semiconductor Corp in the United States was blocked over US natural security concerns.

Canyon Bridge said it would pay 182p a share for Imagination - a 42% premium on its closing price on Friday.

The planned acquisition will not result in any job cuts, the two companies said.

In a move to try to avoid U.S. regulatory attention, Imagination will sell its MIPS business to a VC-backed company called Tallwood MIPS for $65 million. It was not immediately clear whether the divestment would be subject to a CFIUS review. The funds are being provided by initial anchor partner Yitai Capital Ltd., a Chinese state-owned enterprise, according to details provided by Imagination and Canyon Bridge.

Imagination Technologies, which put itself up for sale in June, has been supplying Apple with graphic-processing units, which power videos and other animations on smartphones and computers.

But shares in the once-great European tech success story hit the skids in April when Apple, its biggest customer, said it would stop using its graphics technology in its new products, causing Imagination shares to crash 70 percent.

As part of its push, Apple hired a bevy of engineers from Imagination, including Chief Operating Officer John Metcalfe, and opened a research and development office close to the British company's headquarters. This deal is valued at £550 million GBP and does not include MIPS Technologies, Inc., which Imagination Technologies purchased on February 8th of 2013.

Canyon Bridge's plan to buy Imagination comes after its deal to acquire Portland, Oregon-based Lattice Semiconductor Corp. was rejected by President Donald Trump. In the past two years, the Chinese government has set aside at least CNY 350 billion ($53.11 billion) to invest in new technologies.