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Published on: Jul 11, 2022
The Acquisition
of Imagination Technologies
As part of our ongoing research into Chinese acquisitions in Europe, Datenna decided to highlight and research remarkable cases. This case considers the acquisition of the UK semiconductor company Imagination Technologies.
Acquisition Cases
Europe
Short read
The sale of Imagination Technologies
On the 3rd of November 2017, the acquisition of Imagination Technologies by Canyon Bridge Fund I was completed. The semiconductor and software design company put itself up for sale earlier in June, that same year. The offer for sale came after Apple, its largest customer and one of its biggest shareholders, said it would stop using its technology in their products.
Canyon bridge paid £1.82 per share in cash for each share. This valued Imagination Technologies at approximately £550 million (€619 million). This offer signified a premium of 47.4% to the share price on 21 June 2017.
A State-owned Equity Fund
The shares in Imagination Technologies were acquired by Canyon Bridge Fund I. The fund is based in the Cayman Islands and the custodian of the fund is China’s Bank of Communications. It is managed by Canyon Bridge, but most capital (99%) is provided by Yitai Capital (Hong Kong). Yitai is a 100% subsidiary of China Venture Capital Fund Corporation (CVC), a state-owned investment vehicle. The largest shareholder (35%) is China Reform (China Guoxin Investment) which is owned by the State Council. Other investors in CVC are China Construction Bank and and Shenzhen Investment Holdings. The CCB is owned (through many layers) by the central government’s State Council. Shenzhen Investment is owned by the Shenzhen local government. Based on the financing and ownership structure, we can conclude that Imagination Technologies is now controlled by the Chinese government.
What does Imagination Technologies do?
Imagination Technologies is a company with over 25 years of experience in designing and licensing market-leading processor solutions for graphics. Its technology is used in over 30% of smartphones worldwide. The global headquarters are located in Hertfordshire, United Kingdom. The company creates and licenses semiconductor System-on-Chip Intellectual Property (SoC IP). Before the acquisition, it’s primary activities consisted of the design of PowerVR mobile graphics processors and networking routers. The company also dedicated resources toward the supply of radio baseband processing, networking, cloud computing, and silicon and system design services.
After losing its biggest customer, Apple, Imagination Technologies devoted its activities toward the GPU business. This meant a transition from a varied provider of processor IP to an almost exclusive focus on GPUs and other visual processors. In January 2020, then owned by Canyon Bridge, Imagination Technologies once again entered into a multiyear license agreement with Apple. This new deal grants the US-based firm access to a wider range of Imagination’s intellectual properties in exchange for license fees.
Approval by UK Authorities
The sale of Imagination Technologies was approved by the government of then-Prime Minister Theresa May on the basis that Canyon Bridge was licensed and regulated by US law. However, Canyon Bridge moved its headquarters to the Cayman Islands after the failed acquisition of Lattice (a large US semiconductor company).