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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  • lucam - Tuesday, September 26, 2017 - link

    Just for the benefit of Ryan and all comments to date: Apple A11 still uses design of IMG GPU, TBDR design and PWRTC and IMG extensions on their driver.
    Now I am not sure what sort of agreement Apple has with IMG to date, but this GPU even though don't match any official PowerVR latest solution products, it has PowerVR soul.
    Apple can claim to have designed their GPU as much they want it, but they ain't discover any wheels.
    Reply
  • narmermenes - Thursday, September 28, 2017 - link

    The MIPS business will be much better off in the hands of the Chinese who will greatly expand and improve the architecture as they have with the MIPS licenses they currently have. After all, the successfully used MIPS IP to design and develop the world's fastest and lowest power Supercomputer whereas Imagination basically did nothing worthy with it.
    China also licensed AMD's Hypertransport and incorporated it into the MIPS CPU. Why Imagination decided not to design around MIPS 64-bit and also use HT is a sign of very incompetent management.
    As Imagination has clearly shown US/UK businesses don't have a clue on how to leverage the very scalable and versatile MIPS IP in the way China does.
    As for Mali GPU, I really don't believe China was interested in it at all and their real target was the MIPS IP all along.
    Not only do I hope they get it, but I also hope their future implementations of MIPS is available in the US market.
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