Imagination up against a rival bidder in race to snap up MIPS

City A.M. Reporter
IMAGINATION Technologies’ $60m (£37.6m) pursuit of the operating business of MIPS Technologies faces competition after the target company received a higher bid from a rival firm.

Shares in FTSE 250-listed Imagination closed down 3.8 per cent after the bid from CEVA emerged.

Imagination, which is looking to buy the MIPS business to gain patents and step up its challenge to an increasingly dominant ARM Holdings, said yesterday that the MIPS board continues to recommend its offer.

That could change, however, after MIPS said it will start talks with mobile chip designer CEVA, which has made a $75m bid, as MIPS believes that proposal could lead to a superior deal.

“Imagination is monitoring the situation and will provide a further update in due course,” the British company said in its statement.

Imagination announced its intention to buy MIPS earlier in November. It plans to fund the purchase using existing cash reserves, and has said the acquisition would add to earnings by 2014.

MIPS technology is used in blu-ray players, digital televisions and video games consoles such as the Sony PlayStation 2. It owns around 580 patents.