Apple in talks to buy chip designer Imagination
Published 23/03/2016 | 08:34
Apple has admitted it held talks over a potential takeover of the embattled British microchip designer Imagination Technologies.
The iPhone maker, which is Imagination’s fifth largest shareholder with an 8.4pc stake, has been rumoured to be considering a bid since Intel, another strategic shareholder, sold its stake last year.
Apple’s statement on Tuesday is the first official confirmation that a deal has been considered, however. Despite the interest, Apple added that it did not “plan to make an offer for the company at this time”.
Hertfordshire-based Imagination’s graphics chips are used in Apple’s iPhones, and until recently the company enjoyed rapid growth in tandem with the US technology giant.
News of the takeover talks first emerged via Ars Technica, a technology news website. It triggered a 20pc spike in Imagination’s share price, forcing the parties to tell investors about the talks. However, Apple’s denial that a deal was imminent caused Imagination’s shares to fall back. The stock lost all its gains, before closing up 4.4pc at 195p.
Imagination’s shares are still a long way short of the heights of more than 700p they attained in 2012. At that time the firm’s technology was adopted by a range of smartphone makers, raising hopes it could achieve the kind of global ubiquity enjoyed by rival ARM’s processor designs.
The company now has a stock market value of around £530m, compared with its all-time peak of £2bn.
As high-end smartphone growth slowed and Imagination came under pressure from new rivals, including ARM, investors became unsettled. Upheaval among the microchip manufacturers that buy its designs increased the pressure.
City patience with the long-termist view of Imagination’s management was tested, particularly in relation to Pure, its consumer products division best known for digital radios. Sir Hossein Yassaie, the chief executive who steered the company’s growth, was ousted last month. Imagination announced it would sell Pure and cut a total of 350 jobs worldwide in a major restructuring meant to kickstart growth.
A takeover of Imagination by Apple would signal a major expansion of the iPhone maker’s presence in the UK. Aside from sales and marketing, it has a small teams of specialists in London and Cambridge working on user interfaces and artificial intelligence.