Late this evening Imagination Technologies has announced that they have finally agreed to a buy-out offer. After making noise last month as a potential suitor, Canyon Bridge has announced that they’re buying the struggling GPU firm for 550 million GBP. Meanwhile, as an annex to the deal, Imagination’s MIPS CPU division, which was separately on the market, is being sold to Tallwood Venture Capital for 65 million USD.

As this is a late breaking announcement, not a great deal is known about this deal at the moment. Imagination’s board of directors has reached an initial agreement with Canyon Bridge to sell the company for 182 pence a share, which works out to £550M for the entire company. This is of course contingent on the deal being approved by Imagination’s current shareholders, who are likely to approve the deal as it represents a 41% premium over Imagination’s current 129 pence share price. It is interesting to note however that this price is still well below the roughly 280 pence share price Imagination was trading at before the initial Apple GPU news broke.

As for Imagination’s buyer, Canyon Bridge, the company has not initially said what they intend to do with Imagination. However they have announced that they won’t be cutting any jobs after the acquisition, according to Reuters. The bigger challenge is likely to be getting the deal approved by regulatory authorities; Canyon Bridge has close ties to the Chinese government, and it was on these grounds last week that their acquisition of Lattice Semiconductor was blocked by the US government. In this case the principle authority impacting the deal will be UK authorities.

MIPS Sold to Tallwood for $65 Million

Meanwhile, as a condition of the Canyon Bridge acquisition, Imagination has also finalized their plans for selling off their MIPS business. That business will be sold to Tallwood Venture Capital of California for $65 million. As Imagination initially acquired MIPS for $100M in 2012, this means that the value of the business unit has dropped $35M/35% over the past 5 years. There’s no immediate word on what Tallwood will be doing with MIPS, however it’s notable that the company’s investment portfolio includes a large number of technology companies that were then acquired by bigger players. So it may be that Tallwood intends to rehabilitate MIPS for a future sale.

Politically, selling off the MIPS business also removes a potential US hurdle to the acquisition, as while Imagination was a UK company, the MIPS business operated outside of the US. By selling off MIPS to a US group, the deal is now primarily about Imagination’s GPU business in the UK, which would help Canyon Bridge avoid having another deal blocked by the US government.

End of One Saga, Start of Another

The announcement of an acquisition agreement all but puts an end to an interesting and somewhat tumultuous odyssey for Imagination over the last 6 months. The long-time supplier of GPU technology for Apple’s A-series SoCs found themselves in a pinch in April of this year after Apple informed them that they were going to develop their own GPU, ceasing their use of Imagination’s IP and tapering off royalty payments accordingly. As Apple represented a full half of Imagination’s revenue in the 2015/2016 period, the loss of their biggest customer immediately put Imagination into a bind, as it was clear that Imagination would need to make some significant changes in order to adapt to the loss of Apple’s royalty payments.

The end result was that the company embarked on two major changes. The first being that the company would double down on the GPU business, transitioning from a varied provider of processor IP and focusing almost exclusively on GPUs, video encoders, and other visual processors. In order to achieve that, the company would sell off its MIPS CPU and communications businesses. Eventually the company also opted to put itself up for sale, courting buyers from both the technology and investment communities. Crucially, along with buying the company itself, its employees, and its GPU technology, the buyer would also essentially be buying the opportunity to sue Apple over IP violations with their custom GPU, if they decide to take Imagination’s original complaints against Apple all the way.

Source: Imagination Technologies

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  • name99 - Sunday, September 24, 2017 - link

    It makes no sense to buy a company that has already said it does not want to be bought by you.
    Sure, you get the patent assets, but most of the value is in the people, and if the people don't want to work for you, you can't do anything to force them to be productive. It's not like performing a hostile takeover of a company whose assets are factories and equipment.

    IMG made the decision that it did not want to be bought by Apple. Given that fact, Apple as a buyer now is out of the equation, regardless of the financial details.
    Reply
  • melgross - Monday, September 25, 2017 - link

    This isn’t true. Last year, imagination pled with Apple to buy them for about $1 billion. Apple refused. This has been documented, and was in the news for some time. I don’t know where you’re getting that idea from.

    It never paid for Apple to buy them. In fact, one of the reasons why Imagination went to sell off MIPS, and other businesses was to make the company more palatable to Apple, by getting rid of businesses Apple wouldn’t want.

    Imagination’s problem was that they were never able to get significant business other than Apple’s. They apparently were very arrogant for such a tiny company.

    They refused Microsoft’s request for specific accomodation to their Hololens project. They apparently refused Apple’s request for AI and AR inclusion into the GPU as well.

    It’s something that now haunts them, as they’re making a big deal of this in their latest talks. It’s really difficult to understand.
    Reply
  • name99 - Monday, September 25, 2017 - link

    Here's what has been documented:
    https://www.theguardian.com/business/2016/mar/22/a...

    Apple spoke to IMG about a takeover. It did not happen.
    Beyond that we have no idea about who refused whom or why.

    Personally I'd say the balance of evidence, given how Apple has behaved in other company acquisitions, and how IMG seems unable to hold onto partners despite having impressive technology, suggests that one of the two was rather too demanding in the negotiations (and it wasn't Apple).
    Reply
  • melgross - Monday, September 25, 2017 - link

    Yes, we know that. We also know that it wasn’t Apple that started those talks. If Apple had started them, they would have made an offer. Reply
  • osxandwindows - Friday, September 22, 2017 - link

    Apple didn't want MIPS.

    Besides, they already have most of the talent that worked at imagination.
    Reply
  • schmendrik - Saturday, September 23, 2017 - link

    osxandwindows is full of IT! Keep the BS to yourself because it stinks! Reply
  • osxandwindows - Saturday, September 23, 2017 - link

    Such a low effort comment. Reply
  • melgross - Monday, September 25, 2017 - link

    Except that with this, he’s right. It’s known that Apple hired away at least a couple dozen top engineers from them to work in Apple’s U.K. research lab.

    In fact, that they did that is a reason why it’s been difficult to understand why Imaginations management didn’t realize that something was up. That, and the fact that the lates Imagination GPU technology that Apple has liceenced is from 2015, with apple placing more of their own tech in since then. That’s been reported right here!

    Imagination’s management has been oblivious to what’s been happening for possibly two years.
    Reply
  • flgt - Friday, September 22, 2017 - link

    I imagine they would also pick up the responsibility for existing support of current customers, which probably include Apple’s competitors. Reply
  • melgross - Monday, September 25, 2017 - link

    Well, you see, Imagination’s problem is that they have few licensed customers of any note other than Apple. Reply

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