Imagination Tech sold off to China-backed equity fund

Beijing-backed fund to buy Imagination Technologies in £550m deal

Imagination Technologies Group PLC late Friday said it has agreed a recommended takeover by U.S. fund Canyon Bridge Capital Partners LLC, valuing it at around GBP550 million, alongside the sale of its chip business MIPS CPU.

Apple threw Imagination Technologies into a tailspin when it announced in April that it would no longer use the British graphics chip designer's PowerVR GPU designs in the proprietary SoCs inside iOS devices.

Under the terms of the deal, Imagination shareholders will get 182 pence cash per share, equal to a premium of nearly 42 percent from 22 September, the last day before the transaction was announced, and one of over 47 percent from 21 June, before the company started its formal sale process. The company said in June that it was initiating a formal sale process. That sum is a premium of over 40 per cent, but rather less than the 268.75p per share the company was valued at before Apple's bombshell.

CBFI Investment Limited (owned by Canyon Bridge) is buying Imagination Technologies Group, it was announced late last week.

'However, we believe Imagination has largely mitigated the risk of the United States opposing the deal by agreeing to first sell Mips Technologies to US-based Tallwood VC, a Silicon Valley-based venture capital firm'. Canyon Bridge is paying £550 million ($743.2 million) for the deal.

As a result, the Liberum analysts cut their price target for Imagination back to 182p from 193p to reflect the acquisition price.

Over the weekend news broke that Imagination Technologies had found a buyer for its graphics chip design business.

Imagination is now in a legal dispute with Apple, with the British company telling the stock market last month that it had made "no progress" in resolving it. The two firms are in a legal dispute over royalties at the moment.

President Trump's position on the MIPS sale has yet to be seen.

Canyon Bridge was founded with capital originating from China's central government and had indirect links to Beijing's space program.

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