Feature Article

December 18, 2012

Imagination Technologies Wins Bidding War over MIPS as CEVA Pulls Out

Imagination Technologies Group PLC has reportedly agreed to buy Silicon Valley-based MIPS Technologies Inc. for $100 million, as processor maker CEVA Inc. pulled out of a bidding war for the company.

MIPS is a semiconductor design company that is most widely known for developing the MIPS architecture, a reduced instruction set computer (RISC), instruction set architecture (ISA), as well as a series of RISC CPU chips. MIPS provides processor architectures and cores for digital home, networking and mobile applications. The company’s semiconductors are used in networking and home-entertainment technologies, including digital televisions, Blu-ray players and routers.

The bidding war began last month, shortly after MIPS agreed to sell itself to Imagination Technologies for $60 million. MIPS then received an unsolicited offer of $75 million from CEVA Inc. Imagination Technologies then boosted its bid to $80 million, with CEVA counter-offering $90 million.

MIPS said Monday that its shareholders would receive about $7.94 per share under the $100 million deal with Imagination Technologies, according to Bloomberg. In response to the purchase news, MIPS shares climbed 12 cents to $7.89 in premarket trading. The news wasn’t so good for Imagination Technologies’ stock: the company’s shares fell more than six percent after the announcement, reportedly on concerns the company may have overpaid for MIPS.

Imagination Technologies’ goal is to add MIPS's central processing technology to its business line in order to better compete with ARM, a British multinational semiconductor and software design company with headquarters in Cambridge, England. Imagination will need to borrow about $22m to help finance the purchase.

At least one analyst is cautiously optimistic over the deal.

“Fundamentally, we believe Imagination's proposed acquisition of MIPS makes strategic sense, however, it faces an uphill task in making MIPS' CPU architecture relevant one again, in an increasingly Arm dominated world,” Eoin Lambe of Liberum Capital told the Guardian.

CEVA, an Israeli company based in Sunnyvale, California, said Monday that it won't submit any further buyout bids to MIPS, as paying a higher price wouldn't best serve its shareholders.

Edited by Brooke Neuman

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