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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  • peevee - Tuesday, September 26, 2017 - link

    Apple does not need them anymore as they have already made their own GPU and ditched Imagination.
    And before they did it and Imagination was licensing them its GPU, it was worth more than that (too much).
    Reply
  • osxandwindows - Friday, September 22, 2017 - link

    So when is the review of the GPU and the a11 coming? Reply
  • schmendrik - Saturday, September 23, 2017 - link

    Reverse engineering has probably already started, and if Cook has left some Imagination IP there, it will be the easiest way for Canyon Bridge to maximize their ROI on this investment. Reply
  • Santoval - Saturday, September 23, 2017 - link

    Even if Imagination IP is discovered Canyon Bridge would most likely sue after iPhone8/X have completed most of their sales cycle. You can sue for much more money over devices that have already been sold, instead of suing for less money and trying to block iPhone sales. Reply
  • melgross - Monday, September 25, 2017 - link

    I highly doubt that anyone is going to sue. Imagination has been guessing that Apple is going to use their IP. They have no idea as to what Apple is doing. That’s why they tried to demand to see Apple’s work. It’s a fishing expedition. Reply
  • Lord-Bryan - Saturday, September 23, 2017 - link

    The way Imagination ended up is just sad. This is most likely the potential future for any apple customer. Reply
  • Santoval - Saturday, September 23, 2017 - link

    Even Intel? Reply
  • melgross - Monday, September 25, 2017 - link

    Um, Apple was their customer, not the other way around.

    Every small company is on an edge when a very large company uses their tech. Sometimes, if the large company thinks their tech is so important to their own future, they will make an offer for the company. Apple buys small tech companies all the time. As many as 24 a year! That’s both software and hardware companies.

    Microsoft, for example, used to steal the software of their “partners” all the time.
    Reply
  • jabber - Saturday, September 23, 2017 - link

    My other half bought about 200 IMG shares at around £2.35 a few months before Apple dropped them. Little bit of a hit there. Did better on the ARM shares that she bought for £5 and sold for £17! Reply
  • ianmills - Saturday, September 23, 2017 - link

    I see Canyon Bridge over Canyon Lake when I close my eyes and use my Imagination Reply

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