For sale: tech giant crippled by Apple

iPhone chip maker in hunt for buyer after shares plunge

EMBATTLED iPhone chip maker Imagination Technologies has put itself up for sale amid a bruising battle with Apple.

The firm, once Britain’s most valuable tech company, yesterday revealed it was talking to potential buyers after seeing almost £500m wiped off its value in just one day in April.

The Hertfordshire-based company has designed graphic chips for the iPhone since the product’s launch in 2007 but its fortunes tumbled when Apple announced plans to make the components itself.

Imagination has been seeking a divorce payout from the Silicon Valley giant, which it relies on for about half of its revenues, and says proceedings are still active.

But its decision to put itself up for sale yesterday still sent shares in the company soaring by 16.4pc, or 20.25p to 143.75p, as analysts predicted there would be a long queue of interested investors. It is now valued at £408m, well below its 2012 peak of nearly £2bn. Major firms in the frame possibly include American chip maker Intel, Taiwanese semiconductor company MediaTek, US telecoms firm Qualcomm and even Apple.

Liberum analyst Janardan Menon said: ‘This is a company that ticks a lot of exciting boxes and is working in what are becoming some very important areas.

‘For many of the big companies that will be interested, it is also not that expensive.’ The broker upgraded its recommendation from ‘ hold’ to ‘ buy’, advising investors it could be valued at as much as 233p a share – well above its close last night.

Menon said: ‘It is an underappreciated asset, but that should not detract from the fact it has key intellectual property.’

There were also suggestions of interest from China, with some analysts tipping existing shareholder Tsinghua Unigroup as a possible buyer, although this prospect could create possible issues with regulators.

Malik Saadi, of ABI Research, said: ‘Investors from China, which is looking to become a leader in the internet of things and artificial intelligence, are the most likely. It could even be a company like Alibaba. Imagination still has a lot of value and its tech is paramount to that.’

After its shares crashed in April, Imagination said it would sell its loss-making MIPS and Ensigma businesses to focus on its PowerVR arm, which makes technology for Apple.

Yesterday, it said these sales were ‘ progressing well’ but Liberum suggested there would be several parties seeking to acquire the whole business.

Qualcomm was also in a spat with Apple, the broker noted, and could acquire Imagination to use as a weapon against its rival.

This was one reason why Apple might consider buying the British company itself, analysts pointed out. Bosses at Imagination said they were in early discussions with potential bidders, but added: ‘There can be no certainty any offer will be made.’

The iPhone’s runaway success from 2007 sent its shares soaring, with Imagination’s peak value reaching almost £2bn in 2012, but the firm has struggled to reduce its reliance on Apple.