China-backed fund on course to buy Imagination Technologies as rival bows out


Imagination Technologies makes chips (Source: Getty)

The sale of Imagination Technologies to China-backed Canyon Bridge Capital Partners is going full steam ahead, after another potential buyer ruled itself out of the race.

Shares in Imagination dipped 1.3 per cent in afternoon trading. 

The £550m sale to Canyon Bridge, announced on Friday, hinges on the chip manufacturer offloading its MIPS processor technology in a separate $65m (£48.5m) deal to Tallwood Venture Capital.

The MIPS transaction would have been subject to obtaining shareholder approval in order to satisfy Takeover Panel rules, due to one party not having confirmed that its interest in Imagination had terminated.

However, Imagination said today it "has now received confirmation that the relevant party is no longer actively considering making an offer for Imagination".

"Accordingly, the sale of MIPS does not require shareholder approval," the group added. The sale of MIPS is expected to take place next month. 

Imagination put itself up for sale in June after Apple revealed it would no longer require the use of the British firm's technology to make iPhones in April. Imagination's share price crashed more than 60 per cent at the time.  

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

"Imagination has made excellent progress both operationally and financially over the last 18 months until Apple's unsubstantiated assertions and the subsequent dispute forced us to change course."

He added: "The acquisition will ensure that Imagination - with its strong growth prospects - remains an independent IP licensing business, based in the UK, but operating around the world.

"Imagination employs a large number of hugely talented individuals who have developed our market leading technology. They and the business as a whole will benefit from Canyon Bridge's investment in Imagination as it moves to the next stage of its development."