Private equity company Canyon Bridge is set to make an offer to acquire UK-based Imagination Technologies, but will look to strike a deal excluding the graphics company’s US operations.
Canyon Bridge, which is based in Silicon Valley with backing from the Chinese government, reportedly held talks about acquiring Imagination in July, and is now closing in on making a firm offer, according to Bloomberg sources.
However, the private equity company is keen to avoid scrutiny from US regulators and, as a result, will look to structure a deal which does not include acquiring Imagination Technologies’ US business.
Its reluctance to deal with the US is likely related to a $1.3 billion acquisition of US microchip manufacturer Lattice Semiconductor the fund brokered in 2016, which is currently under review by a US government committee.
Canyon Bridge’s links to the Chinese government stirred up national security concerns among US officials, and President Donald Trump is also reportedly considering whether to block the deal.
It, of course, remains to be seen whether Canyon Bridge will also face regulatory scrutiny from the UK, should it strike a deal for Imagination Technologies.
The UK company put itself up for sale in June, following a well-publicised dispute with its largest customer Apple, which terminated its contract with Imagination Technologies in April.
Apple said it was ending its deal to use Imagination Technologies’ graphics intellectual property in favour of developing its own in house alternative, and the two companies then failed to agree a royalties deal which led to Imagination Technologies filing a dispute resolution action.
As of 28 June, Apple also owned 8.1 per cent of the graphics processor company.
Along with Canyon Bridge, Imagination Technologies drew interest from several other parties, added Bloomberg, including SoftBank-owned ARM and chip designer Rambus.
However, like Canyon, some potential bidders may only be interested in specific parts of the business, and could ultimately decide against bidding.