Imagination Technologies up for sale amid Apple dispute

Shares in UK tech company Imagination Technologies Group jumped 16% on Thursday after it confirmed it had formally put the entire company up for sale, just months after Apple surprised the company by announcing the end of its relationship. 

Apple cancelled its contract with Imagination, which provides chips for many Apple devices, earlier this year in a surprise move that Imagination has since challenged on intellectual property grounds. 

The company said that over the last few weeks it had received interest from some parties for a potential acquisition, which has led it to initiate a formal sale process for the company and engage with those companies. 

"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."

The group said there was no certainty that an offer would be made, nor that a transaction would be executed.

N+1 Singer said the stock was firmly in "special situation" territory, but changed its recommendation to HOLD as it is likely an offer will be made:

"Imagination has announced that it has initiated a formal sale process for the whole group and is engaged in preliminary discussions with potential bidders. The group has also confirmed that it remains in dispute with Apple, its largest customer. Without Apple, we are not convinced of the long-term viability of the business model."

Singers said the PowerVR IP would be attractive to a "number" of bidders, but that the value would be difficult to ascertain as it was primarily an IP-based sale.