Hertfordshire-based chipmaker Imagination Technologies Group has announced that it is set to sell itself to a private equity firm backed by the Chinese government called Canyon Bridge.
The deal, valued at £550 million ($742.5 million) or 182 pence per share, is at a premium of over 40 per cent. Its timing may come as something of a shock, considering the company’s ongoing dispute with Apple that has seen its share price go into free fall. Prior to Apple’s admission that it may dump Imagination’s GPU tech, the British firm’s price was significantly higher than even the premium rate that the Canyon Bridge group has settled on, at 268.75p per share. Both valuations are greatly reduced from Imagination’s peak 2012 price of 712.5 pence per share that saw the company sitting at close to £2 billion.
In spite of the lucrative acquisition, critics have argued that the company should not be allowed to be sold to a group effectively funded by the Chinese government. Speaking to the Daily Mail, former MI6 deputy head Nigel Inkster has said that the deal "could put UK security at risk" due to the UK government’s lack of a clear policy on China.
As a part of the deal, Imagination is required to sell off its MIPS busines. A deal has already been struck with Tallwood MIPS Inc, which will pay $65 million. That comes after US president Donald Trump had ordered that the Chinese-funded Canyon Bridge be prevented from buying a similar American company – US-chipmaker Lattice Semiconductor. He argued that the group “might take action that threatens to impair the national security of the United States”.
Unpeturbed by criticisms, Canyon Bridge partner Ray Bingham 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.”