But revised offer could seriously dent its cash pile
UK chip maker Imagination Technologies has upped its takeover offer for MIPS, trumping yet again bidding rival Ceva.
Only last week Ceva looked set to win after putting $90 million on the table, but today [17th December 2012] it was revealed that Imagination might be back in the running by increasing its offer to $100 million.
But the revised offer, if accepted, is likely to drag down Imagination’s cash position though at stake is MIPS vast library of patents in the mobile field.
Only last week the British manufacturer reported a 66 per cent year-on-year rise in royalty revenues in the last six months, but its shares still plunged when it also disclosed that higher research costs were eating into profit margins.
Imagination, which sells its technology to the likes of Apple, is expected to get royalties from some half billion chips sold by licensees this year, but still needs to invest heavily in research if only to keep up with fellow British chip maker ARM.
If its latest bid for MIPS does succeed it will be financed from a combination of Imagination’s own reserves and a “new acquisition facility” that it says has already been established.
UPDATE: Last night Ceva, which had twice outbid Imagination, looked as though it was throwing the towel, saying that while there was merit in buying MIPS, raising its offer again would not meet its financial objectives.