Imagination, MIPS to be sold to China-, California-connected VCs: Page 2 of 3

September 23, 2017 // By Peter Clarke
Imagination, MIPS to be sold to China-, California-connected VCs
Processor intellectual property licensor Imagination Technologies Group plc (Kings Langley, England) has agreed to sell off its MIPS processor business to Tallwood Venture Capital (Palo Alto, Calif.) and then to sell the remainder of itself to Canyon Bridge Capital Partners LLC (Palo, Alto, Calif.), a venture capital firm that is managing funds provided by China.

How much Canyon Bridge might be prepared to invest beyond the purchase price for Imagination was not discussed in the document.

The price that Canyon Bridge has agreed to pay for Imagination, 182 pence per share, represents a premium of 41.6 percent over the Imagination share price of 128.5 pence per share recorded at the close of the London Stock Exchange Friday September 22.

Ray Bingham, partner at
Canyon Bridge Capital Partners LLC.

Although Imagination has been a successful vendor of graphics processor units (GPUs), particularly in to smartphone SoCs, it has struggled financially and in the past relied on leading customers, particularly Apple Inc., to bail it out. Imagination put itself up for sale (see Imagination puts itself up for sale) in June 2017 after it had revealed that Apple had said it would discontinue its licensing relationship with Imagination and stop paying royalties (see Apple breaks with Imagination and Apple hires group of UK GPU engineers ).

Before the final disposal of Imagination goes ahead the company plans to sell its MIPS business, including all intellectual property and patents to Tallwood MIPS Inc., a subsidiary company of Tallwood Venture Capital. The price, on a cash and debt-free basis, will be $40 million payable on completion with a further $25 million due six months after completion.

"This transaction, which is separate to the offer for Imagination by Canyon Bridge, will ensure MIPS remains an independent licensing business," said Imagination CEO, Andrew Heath, in a statement issued after the close of the London Stock Exchange on Sept. 22.

In the same statement Bingham of Canyon Bridge, said: "With our backing and investment, Imagination can continue to invest in developing its technology, attract and hire the best engineers, and acquire and service customers globally."

Next: To accelerate into Asia.

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