Imagination Technologies is Looking for a Buyer
25 June, 2017
This is the power of Apple Inc: Three months after it clashed with Imagination Technologies - the company put itself up for sale!
[Photo above: Imagination’s Headquarters in Hertfordshire, UK]
Five weeks after the British silicon IP (intellectual property) provider Imagination Technologies (IMG.L) announced the sale of its MIPS division that provides RISC based CPU IP, the company announced the commencement of formal sale process for whole Group. In a letter to shareholders, sent on June 22, 2017 Imagination’s Chairman, Peter Hill, informed that over the last few weeks it has received interest from a number of parties for a potential acquisition of the whole Group.
“The Board of Imagination has therefore decided to initiate a formal sale process for the Group and is engaged in preliminary discussions with potential bidders. “The sale process for the MIPS and Ensigma operations, which commenced on 4 May 2017, is progressing well and indicative proposals have been received for both businesses.”
The Company’s business model is based on the licensing of embedded processor intellectual property (IP) in the form of both architectures and implementations. MIPS customers are global semiconductor companies and system original equipment manufacturers (system OEMs). Its technology is standard processor architectures and cores, mainly GPU, CPU and networking, sold to global semiconductor companies and OEMs, through its main divisions: Ensigma, MIPS and PowerVR.
Employing approximately 1,400 employees and traded in London with market value of about $618 million, Imagination struggle a financial crisis and a major uncertainty caused by GPU dispute with Apple. Three months ago Imagination’s largest costumer, Apple Inc, has decided to cut the royalties it pay to Imagination by 2/3, resulted in a law suite of Imagination against Apple. On May 4, Imagination has commenced a dispute resolution procedure under the licence agreement “with a view to reaching an agreement through a more structured process”.
This did not impress the market: UBS analysts estimated that Imagination will record losses in fiscal year 2019. The issue is deeper, lately Techtime has learned from sources close to the company that Apple plans to develop its own GPU processor. A move that will not only cut off Imagination relationships with its giant costumer – but also creates a formidable competitor in its most important segment of the market.
This is the power of Apple: Three months after it clashed with Imagination Technologies – the company put itself up for sale!