Chinese £550m Imagination deal will test PM’S resolve

CHINA-BACKED fund Canyon Bridge has swooped on Imagination Technologies in a £550m deal which looks set to test Theresa May’s pledge to intervene in foreign takeovers.

Late yesterday, Imagination said it had agreed to a takeover by Canyon Bridge which, although based in Silicon Valley, is funded by authorities in Beijing. Canyon’s interest in Imagination, which is based in Hertfordshire, was first reported by The Daily Telegraph in July.

Its offer price of 182p per share is 42pc higher than the closing price yesterday. However, shares in the group are almost 50pc below the level they were trading at prior to news earlier this year that Apple would stop using its graphics technologies in the iphone.

The deal is likely to reignite the debate over the vulnerability of British companies to asset strippers, when compared to peers in the US and Europe. Earlier this month, the Government voiced its concern over the potential takeover of Imagination by Canyon. British microchip designer ARM had reportedly been circling Imagination in the hope of snatching a bargain, although sources familiar with ARM’S thinking said it was unwilling to enter a bidding war.

On agreeing the deal, Canyon said it had “no plans to make any changes to the continuing employment of employees and management, nor does intend to change the principal locations of Imagination’s places of business, or redeploy any fixed assets of Imagination”.

Canyon’s commitments follow a UK decision to tighten the Takeover Code to increase the level of disclosure required from foreign bidders and require them to publish a report into whether they have stuck to promises over location of headquarters and the changes to staff.