IMG Board recommends Canyon Bridge 182p/share offer

IMG have confirmed an offer from Canyon Bridge (Chinese state-owned) for 182p per share for PowerVR/Ensigma and a separate sale of MIPS to Tallwood VC for $65m cash (to be used to pay off debts):

Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”), a leading multimedia, processor and communications technology company, has agreed to sell its worldwide MIPS CPU business (“MIPS”), including all MIPS Intellectual Property (“IP”) and patents, to Tallwood MIPS Inc, a company indirectly owned by Tallwood VC of Palo Alto, CA (“Tallwood”) for a total consideration of $65m in cash. Tallwood is a Silicon Valley-based venture capital firm with years of experience in the semiconductor industry.
As separately announced today, Imagination has also reached an agreement on the terms of a recommended offer for the Group at 182p per Imagination ordinary share. The sale of MIPS is on a cash and debt free basis and subject to customary adjustments. $40m of the proceeds are payable in cash at completion and $25m in cash six months after completion. The sale is conditional on shareholder approval (if required under Rule 21.1 of the Takeover Code) and on the completion of the corporate reorganisation to separate MIPS from the remainder of the Group. Completion of the sale is expected to occur in October 2017.
Following completion of the transaction, cash proceeds will be used to reduce the Group’s debt, with the balance applied for general corporate purposes. Andrew Heath, Chief Executive of Imagination, said: “This transaction, which is separate to the offer for Imagination by Canyon Bridge, will ensure MIPS remains an independent licensing business. “MIPS has gained notable momentum over the last year or so having secured a number of design wins, and made good progress towards profitability.

“This significant progress, allied to Tallwood’s investments in the semiconductor industry, will provide increased customer choice and new job opportunities based on the continued growth of the MIPS business.”


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There is the small matter of the on-going Apple/PowerVR IP dispute, so we will have to wait and see what happens over the coming months.