China-Backed Firm Reaches Deal to Buy Apple Supplier Imagination Technologies

By Julie Steinberg 

Canyon Bridge Capital Partners LLC, a China-backed investment firm whose planned acquisition of a U.S. semiconductor company was scuttled earlier this month, has reached a deal to buy a U.K.-based chip designer for GBP550 million ($742.2 million).

Canyon Bridge said late Friday it will acquire Imagination Technologies Group PLC, a small but important Apple Inc. supplier, in an all-cash deal for 182 British pence a share, a 42% premium to Imagination's Friday closing price.

To appease any concerns that the deal may raise among British authorities, Canyon Bridge said it would maintain Imagination's U.K. headquarters and indicated it had no plans to cut jobs or change Imagination's management.

Imagination, which put itself up for sale in June, doesn't manufacture chips itself. It had been supplying Apple with graphic-processing units, which power videos and other animations on smartphones and computers. Imagination in April said Apple would stop using Imagination's technology in its devices, which sent shares plummeting. Imagination said at the time that Apple was working on its own designs for such technology.

Canyon Bridge's plan to buy Imagination comes after its deal to acquire Portland, Ore.-based Lattice Semiconductor Corp. was rejected by President Donald Trump. The companies had appealed to Mr. Trump to overrule a negative recommendation by the Committee on Foreign Investment in the U.S., a multiagency panel that screens foreign takeovers for national-security concerns.

Canyon's potential deal with Imagination excludes the latter's U.S. embedded-processor business, which Imagination said Friday it is selling for $65 million to Tallwood Venture Capital, a Palo Alto, Calif.-based firm. Leaving out the U.S. operations would help avoid scrutiny from CFIUS this time around.

Tallwood invests mainly in semiconductor companies. It also has a China connection: It has operations in Wuxi city, Jiangsu province and in 2010 joined with a local government entity to invest in China's semiconductor industry.

Divesting the U.S. operations is a precondition of the Imagination acquisition, so if CFIUS blocks the Tallwood-Imagination deal, that could imperil the Canyon-Imagination tie-up.

Kate O'Keeffe and Ben Dummett contributed to this article.

Write to Julie Steinberg at [e-mail]

(END) Dow Jones Newswires

September 23, 2017 04:37 ET (08:37 GMT)

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