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© alexander podshivalov dreamstime.com Components | November 06, 2012

Imagination to acquire MIPS

Imagination Technologies has signed a definitive agreement to acquire MIPS. MIPS have also signed a separate deal to sell patent properties to Bridge Crossing.

Imagination Technologies Group plc, a multimedia, communications and embedded processor technology company, has signed an agreement to acquire the operating business and certain patent properties, as well as license rights to all of the remaining patent properties, of MIPS Technologies, Inc. MIPS, a provider of CPU processor architectures and cores, for a cash consideration of US$60 million. In addition to the operating business of MIPS, Imagination’s purchase includes ownership of 82 key patent properties (the “Retained Patent Properties”) that are directly relevant to the MIPS® architecture, and comprehensive license rights to all of the remaining 498 MIPS’ patent properties (the “Divested Patent Properties”). In a separate transaction, the Divested Patent Properties are being sold to Bridge Crossing LLC, by MIPS for US$350 million. Hossein Yassaie, Chief Executive Officer, Imagination said: "MIPS is the company that pioneered the RISC CPU architecture and created an iconic and widely respected technology. I am absolutely delighted to welcome MIPS and its team to the Imagination family. I believe that the combination of our existing Meta CPU technologies and activities with MIPS'; capabilities will help us to create a new force to be reckoned with in the CPU IP market. I am confident the acquisition will accelerate our growth in the substantial CPU IP market across many segments." Sandeep Vij, President and Chief Executive Officer, MIPS said: "The synergy between Imagination and MIPS makes the proposed transaction a notable step forward, not only for the two companies, but for the whole electronics industry. It was key for us that our customers and partners were assured of a strong, long term future for MIPS' architecture, cores and other technologies, and thanks to this agreement we are confident we have found the ideal partner to take that forward." Funding and anticipated financial effects of the acquisition The total consideration payable by Imagination is US$60 million in cash. The consideration will be financed from Imagination's existing cash resources. Based on current business prospects, Imagination anticipates that the acquisition of MIPS will be marginally dilutive to earnings per share for the 2013 financial year, and accretive to earnings per share in 2014 (excluding one off items). As part of the documents relating to the acquisition, MIPS has agreed to hold back approximately c.US$100 million in cash in respect of various ancillary transaction matters including a tax liability that is likely to arise as a result of the sale of the Divested Patent Properties and liabilities of MIPS relating to employee retention and severance payments.
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