Apple row chip maker for sale

MICROCHIP designer Imagination Technologies has put itself up for sale two months after a falling out with its biggest customer, Apple, sent its shares crashing by more than 60 per cent.

The one-time stock market darling, a key supplier to the iPhone and other electronic devices, said it had takeover interest from “a number of parties” over the past few weeks and is in early stage talks with potential buyers.

Analysts said Imagination could attract interest from several Chinese suitors, as well as Taiwanese group MediaTek and US giants Intel and Qualcomm.

Imagination chief executive Andrew Heath, pictured, also confirmed that it remains in dispute with Apple.

The iPhone maker was responsible for half of its £120million revenue last year, but has decided to stop using the Herts firm’s intellectual property in its products with effect from as early as next summer.

This means Imagination will not be eligible for royalty payments under its current licence and royalty agreement with Apple.

Imagination, which is valued at about £410million after yesterday’s 20¼p jump to 143¾p, had already announced last month that it is looking to offload its MIPS and Ensigma businesses to boost its finances. That process is “progressing well” and indicative proposals have been received for both businesses.

Neil Wilson, senior market analyst at ETX Capital, said: “No wonder buyers are keen – shares in the group are down around 60 per cent from where they were before it stunned the market by saying Apple was pulling the plug on its chip supply deal in little over a year’s time.

“It was never going to be easy for Imagination when it lost its biggest customer and efforts to offload two of its three main businesses to strengthen the balance sheet clearly weren’t enough.

“These were both strong potential growth areas that could have delivered lasting revenue accretion to offset the loss of Apple.

“That was a pretty dire scenario, akin to selling off the family silver to keep the estate going a little longer. Now the shutters are up and a buyer sought. A pretty ignominious end to what was a great British tech success story.”

Broker Liberum said: “Given the long list of potential bidders we expect this to be an interesting process.”