Reports were flying around earlier today of how Apple Inc. (NASDAQ:AAPL) planned to buy UK chip technology company Imagination Technologies. The reports which claimed that Apple was in advanced talks with the UK firm emanated from ArsTechnica.
Imagination, however, issued a statement from Apple, which confirmed the interest and discussions but, however, went on to say there was no plan to offer to buy it at present. The statement read, “From time to time, Apple talks with companies about potential acquisitions. We had some discussions with Imagination, but we do not plan to make an offer for the company at this time.” Apple is both a customer and a shareholder in the UK firm Imagination.
By the news, Imagination’s share price rose up by nearly 20 percent today as the news broke out and there was no word from both the companies. The statement signifies a lot since it is usually very rare for Apple to issue out statements and comment on its acquisitions- let alone discussions that culminated into nothing. The only plausible reason is that since Imagination is a UK based company, which was being targeted by a heavyweight the news, would be considered to be market mover hence the need to issue out a statement.
The announcement was made according to the rules as mentioned in the second part of Imagination’s statement which read, “This announcement is made in accordance with Rule 2.8 of the Code. As a result of this announcement, Apple will, except with the consent of the UK Panel on Takeovers and Mergers, be bound by the restrictions contained in Rule 2.8 of the Code.”
Apple holds an 8.48 percent stake in the UK-based company according to Imagination’s last quarterly report. The UK Company, Imagination Technologies, confirmed layoffs last week, which brought the total to 350 for the year already. The company is looking cut some $22 million of operating costs by 2017. The company’s relationship with Apple is based on the fact that it supplies Apple with chipset technology, specifically around graphics components for the iPhone and Imagination’s Power technology, along with other handset makers.
Demand for these kinds of devices has declined since smartphone sales are gradually falling. Imagination has been hit because of this, and their less profitable areas are taking the hit. It also announced that it was putting its consumer electronics division up for sale.
The company, however, noted that this would have little to no impact on its three main business areas, which are graphics and multimedia (Imagination’s PowerVR business), processing (its MIPS processor business that it got in 2012) and connectivity (its Ensigma low-power communications IP business).