* Ceva declines to raise offer again
* Auction drives Imagination to raise bid from $60 mln to
* Imagination shares down 3.2 pct
By Paul Sandle
LONDON, Dec 17 British chip designer Imagination
Technologies on Monday beat Ceva Inc in the
race to buy processing technology firm MIPS with a
knockout offer of $100 million.
Imagination and its U.S. rival have been battling to buy the
operating business of MIPS, a pioneer of 32-bit and 64-bit
processing, since last month when a $60 million agreed deal from
the British company triggered a bidding war.
Mobile chip designer Ceva, which had twice outbid
Imagination, said while there was merit in buying MIPS, raising
its offer again would not meet its financial objectives.
MIPS' technology is in blu-ray players, digital televisions
and video games consoles such as the Sony PlayStation 2.
Imagination, whose graphics and video technology is used in
Apple's iPhone, wants to buy MIPS to strengthen its hand against
the likes of ARM Holdings in CPUs, the central
processors in devices like routers, modems and games consoles.
Shares in Imagination were trading 3.2 percent lower at
396.3 pence by 1401 GMT, underperforming a 0.3 percent lower
Analysts at Liberum Capital said that with net cash of $78
million, Imagination would have to borrow about $22 million for
its higher offer.
"While no one likes a leveraged tech company, Imagination is
a cash generative business," the broker said.
"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."
Analyst Lorne Daniel at FinnCap, meanwhile, said the fact
that Imagination was clearly prepared to overpay for a
loss-making business with $60 million of revenue was indicative
of how important the CPU move was to its future.
California-based MIPS agreed to sell 498 patents for $350
million to a consortium of technology companies organised by
patent holding company Allied Security Trust and led by chip
designer ARM when it agreed the initial Imagination