Imagination surges after deal

Shares in Imagination Technologies surged yesterday after the British chip maker was bought by US fund Canyon Bridge Capital Partners in a deal worth £550 million.

The tie-up, outlined on Friday, will see each shareholder receive 182p per share – a premium of around 42 per cent of the firm’s share price on 2 September.

Shares in Imagination plummeted more than 60 per cent in April after it revealed that US tech giant Apple would no longer use its products, meaning it will no longer be eligible for royalty payments. Imagination, which put itself up for sale in June, also revealed late last week that it had secured a separate deal to sell MIPS – its US micro-processing division – to Silicon Valley venture capital fund Tallwood for $65 million (£48m).

Andrew Heath, Imagination chief executive, said on Friday that the outcome was “very good” for the firm’s shareholders and the directors would unanimously recommend the tie-up.

He said the deal will ensure the company has “strong growth prospects” and will remain an independent IP licensing business based in the UK. Imagination announced a £2.4m annual pre-tax profit in July, compared with a £29.4m loss in 2016, while group revenue was up 19 per cent to £145.2m.

AJ Bell analyst Russ Mould said: “The deal is a very good outcome for Imagination’s shareholders and provides certainty at a time when its future had been negatively impacted by Apple’s decision.”

Canyon Bridge, which is based in America but funded by Chinese authorities, is reported to have said it is eyeing more acquisition opportunities in the UK.