Oil keeps a lid on European shares, Imagination Tech soars
- Author: Arturo Norris Jun 22, 2017,
Jun 22, 2017, 12:58
The firm said it remained in dispute with Apple, which it accuses of infringing its intellectual property rights.
It added that the board has began a "formal sale process" and has started early talks with potential bidders.
Imagination Technologies risks losing future royalty payments from Apple, which had previously warned the United Kingdom supplier that it will cease using its graphics technology for new products, including phones, tablets, and watches, in 15 months to 2 years.
Apple's move loped more than £500 million ($625 million) from Imagination's market value in less than 15 minutes after the shares plunged 70%, on the day the announcement was made.
"The sale process for the MIPS and Ensigma operations, which commenced on 4 May 2017, is progressing well and indicative proposals have been received for both businesses", said the company in a statement. "These were both strong potential growth areas that could have delivered lasting revenue accretion to offset the loss of Apple".
But it seems that Apple is not backing down, which has forced Imagination to put itself up for sale, a move that drove its share price up 20 percent. Imagination products have been part of all of Apple's mobile devices - iPhones, iPads, and iPods - since 2008.
Apple, which owns an 8.1 percent stake in Imagination Technologies, considered acquiring the United Kingdom supplier as recently as a year ago.
This shows the raw power companies like Apple have over the market, and how much their suppliers have to lose.
The chip maker told investors on Thursday that it had been approached by a number of parties interested in acquiring the whole company in "the last few weeks" as it has been working to divest separately its MIPS and Ensigma divisions. "Now the shutters are up and a buyer sought [for the entire company]".