Imagination Technologies has agreed a £550m takeover with China-backed Canyon Bridge

by

Apple previously used Imagination tech in its iPhone (Source: Getty)

The sale of UK firm Imagination Technologies to a China-backed fund has been agreed.

The company, which previously supplied to Apple, will be bought by Canyon Bridge Capital Partners for £550m.

"The proposed acquisition is a very good outcome for Imagination's Shareholders which the Imagination directors are intending to recommend unanimously," said chief executive Andrew Heath.

Read more: Businesses back tech as source of post-Brexit growth for London

Imagination put itself up for sale in June after losing its contract with Apple. Apple then confirmed it would not be making an offer for the company.

Heath said the deal means Imagination will remain in the UK, but the swoop by the fund, which was last year revealed to be partly backed by the Chinese government, could raise concerns over a brain drain from the UK's tech sector.

Theresa May has promised to heap more scrutiny into foreign takeovers of UK businesses, following public opposition to Kraft's acquisition of Cadbury.

Read more: Queen's Speech for City: More Brexit talks, takeover rules on, exec pay out

Canyon Bridge already failed in one of its bids for a Western chip maker, after its $1.3bn (£960m) deal for Lattice Semiconductor in the US was blocked by President Trump on security grounds.

But Ray Bingham, partner and Canyon Bridge yesterday sought to smooth over fears that new ownership could amount to a loss for the UK's tech industry. He said: "We are investing in UK talent and expertise in order to accelerate the expansion of Imagination, particularly into Asia, where its technology platform will lead the continued globalization of British-developed innovation."

Separately, Imagination also announced yesterday that it has agreed to sell its MIPS CPU business to California-based venture capital firm Tallwood for $65m (£48.2m), making a loss on its original investment of $100m.