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Imagination Technologies' Chinese suitor on hunt for fresh UK deals

Ashley Armstrong
Imagination was forced into a sales process after its biggest customer Apple said it no longer needed to use its chips for its iPhones - Getty Images North America

The boss of the Chinese-backed private equity firm behind a proposed £550m takeover of Imagination Technologies is already eyeing further acquisition opportunities in the UK.

Ray Bingham, partner at Canyon Bridge, told The Daily Telegraph that there are other British technology businesses that it is looking at and the firm is in the process of raising more money from investors. “There are UK companies in other technology areas that are still consistent with our strategy”, he vowed.

Canyon Bridge, which is based in Silicon Valley but funded by authorities in Beijing, has attempted to assuage UK political grumblings about the foreign takeover by saying that it has no plans to eliminate jobs. Mr Bingham said there was a “strong commitment to invest in the company, its UK brains and the wider UK technology community in Cambridge.”

Sources on the deal, which was announced late on Friday night, said that they were “watching closely” for any signs that the Competition and Markets Authority (CMA) could use its extended powers to scrutinise the deal on public interest grounds.

A source stressed that the deal was unlikely to meet a public interest test threshold as the Imagination takeover was “safeguarding a struggling company’s future, rather than asset stripping a well-performing business”.

Canyon Bridges’ advisers have already had early conversations with Government officials prior to the deal being announced, which Mr Bingham said had been “very encouraging”. The company also briefed Imagination’s top shareholders, including Baillie Gifford and Standard Life Aberdeen, ahead of announcing the deal.

Imagination was forced to put itself up for sale in June after its largest customer, Apple, triggered a 70pc slump in its share price by declaring it would no longer use the company’s graphics technology in its new iPhone models.

Imagination is now pursuing a legal claim against Apple and if it wins the dispute before its takeover closes, deal documentations reveals Imagination investors will be entitled to 50pc of that settlement payment with Canyon Bridge keeping the rest. However, in a weird twist, Apple will also benefit if it does pay out, as it owns an 8pc stake in Imagination.

The Hertfordshire-based chip designer has also sought to swerve a Donald Trump broadside by agreeing a separate deal to sell its US microprocessing divsion, MIPS, for $65m (£48.1m) to Silicon Valley venture capital fund, Tallwood.

President Donald Trump barred a takeover of US chipmaker Lattice Semiconductor by Canyon Bridge, the same firm behind the Imagination deal

Earlier this month the US president blocked Canyon Bridge’s $1.3bn attempted takeover of US chipmaker Lattice on national security grounds. Because Imagination is selling MIPS, which makes microprocessors found in set-top boxes and wifi routers, to a US citizen-led business instead of one with Chinese links, that deal will not require clearance from the Committee on Foreign Investment in the United States (CFIUS).

If Canyon Bridge fails to gain clearance from the CMA it may face a £13.7m break fee charge, while if Imagination strikes a successful deal with another bidder the UK firm must pay £5.5m to the Chinese-backed firm.

Andrew Heath, who took the helm at Imagination after long-time chief Sir Hossein Yassaie fell on his sword last February, could be in line for a £2.8m payout from the deal. Meanwhile Sir Hossein will receive £365,980 for his remaining 0.07pc stake in the business should the 182p-a-share offer succeed.