Imagination Technologies Group Regulatory News (IMG)

25 September 2017

Imagination Technologies Group plc

Sale of MIPS and update on Formal Sale Process

Sale of MIPS

Imagination Technologies Group plc (LSE: IMG, "Imagination", "the Group"), a leading multimedia, processor and communications technology company, has agreed to sell its worldwide MIPS CPU business ("MIPS"), including all MIPS Intellectual Property ("IP") and patents, to Tallwood MIPS Inc, a company indirectly owned by Tallwood VC of Palo Alto, CA ("Tallwood") for a total consideration of $65m in cash.

Tallwood is a Silicon Valley-based venture capital firm with years of experience in the semiconductor industry.

As separately announced today, Imagination has also reached an agreement on the terms of a recommended offer for the Group at 182p per Imagination ordinary share.

The sale of MIPS is on a cash and debt free basis and subject to customary adjustments. $40m of the proceeds are payable in cash at completion and $25m in cash six months after completion.

The sale is conditional on shareholder approval (if required under Rule 21.1 of the Takeover Code) and on the completion of the corporate reorganisation to separate MIPS from the remainder of the Group. Completion of the sale is expected to occur in October 2017.

Following completion of the transaction, cash proceeds will be used to reduce the Group's debt, with the balance applied for general corporate purposes.

Andrew Heath, Chief Executive of Imagination, said:

"This transaction, which is separate to the offer for Imagination by Canyon Bridge, will ensure MIPS remains an independent licensing business.

"MIPS has gained notable momentum over the last year or so having secured a number of design wins, and made good progress towards profitability.

"This significant progress, allied to Tallwood's investments in the semiconductor industry, will provide increased customer choice and new job opportunities based on the continued growth of the MIPS business."

Update on formal sale process

Imagination announced on 22 June 2017 the commencement of a formal sale process under the Takeover Code in respect of the Imagination Group and engaged in discussions with a number of potential purchasers.

Further to the announcement today of the terms of a recommended cash offer for the Imagination Group and the disposal of MIPS referred to above, the formal sale process under the Takeover Code in respect of the Imagination Group and the sale processes for MIPS and Ensigma businesses have now been concluded. One party has not confirmed whether its interest in the Imagination Group has terminated and accordingly it remains a potential offeror for Imagination for the purposes of the Takeover Code.

Accordingly for so long as this party remains a potential offeror, the Company is required to seek shareholder approval for the sale of MIPS at a General Meeting for the purposes of Rule 21.1 of the Takeover Code. A circular is expected to be posted to Imagination shareholders shortly.

Notes to Editors

About Imagination Technologies

Imagination creates and licenses semiconductor processor IP (intellectual property) for graphics, video and vision processing, general purpose and embedded processing (CPU & MCU). Imagination's customers use Imagination's silicon IP to create the Systems on Chips (SoC) that power electronic devices. Imagination has built three strong brands around these processing blocks: PowerVR in graphics and multimedia; MIPS in processors; and Ensigma in connectivity. See: www.imgtec.com.

About MIPS

The MIPS family of CPU IP is composed of a portfolio of low-power, high-performance 32/64-bit processor architectures and cores, which range from high-performance cores for high-end applications processors to smaller cores for microcontrollers.

MIPS cores are produced in three classes of performance and features: Warrior M-class are entry-level ultra low power small cores for embedded and microcontroller applications; Warrior I-Class are scalable mid-range, feature rich cores for mainstream Linux and Android devices; and Warrior P-Class are high-performance cores for demanding applications.

In the year to 30 April 2017, MIPS's loss before tax was £8.0m and it had gross assets of £11.7m.

About Tallwood

Tallwood is a leading Silicon Valley venture capital firm with a philosophy to invest in differentiated technologies and products that will have a significant impact on the semiconductor industry. Led by Dado Banatao, who is renowned throughout the high technology industry as an innovator, strategic investor, and philanthropist, Tallwood builds close working relationships with its portfolio companies to maximize growth opportunities.