UK-based chip maker Imagination Technologies, has agreed to sell itself to Canyon Bridge, a Silicon Valley-based private equity firm backed by the Chinese fund Yitai Capital.

The news comes nearly six months after Apple, Imagination's biggest customer, announced that it would no longer require the company's services. Canyon Bridge is paying £550 million ($743.2 million) for the deal.

Imagination has also separately announced that it has entered into an agreement with Tallwood MIPS, Inc., a company indirectly owned by Tallwood Venture Capital, with respect to the disposal of MIPS. Imagination and CBFI have agreed that the completion of the MIPS Disposal is a condition of the Canyon Bridge acquisition.

Pursuant to the MIPS SPA, Tallwood will pay consideration of $65 million, subject to customary adjustments. $40 million is payable in cash on Completion, with a deferred consideration of $25 million payable six months after Completion. Imagination expects the completion to occur in October 2017.

The Imagination Directors believe that the proposed acquisition provides Imagination Shareholders with a very good outcome and provides execution certainty at a time when the future of the business has been negatively impacted by the actions of Apple.

Apple's announcement had halved Imagination's stock price almost overnight, creating a existential crisis for the firm. At the time, Apple confirmed it was bringing mobile graphics development in-house, a move that eventually manifested itself in the A11 Bionic chip revealed during the iPhone 8 and iPhone X hardware event earlier this month.

"Imagination has a world-class management team and highly talented employees. With our backing and investment Imagination can continue to invest in developing its technology, attract and hire the best engineers, and acquire and service customers globally. This transaction is in line with Canyon Bridge's strategy of providing equity and strategic capital to enable technology companies to reach their full growth potential by opening new markets through our collaborative investment approach.We are investing in UK talent and expertise in order to accelerate the expansion of Imagination, particularly into Asia, where its technology platform will lead the continued globalization of British-developed innovation," said Ray Bingham, Partner of Canyon Bridge.

"The proposed acquisition is a very good outcome for Imagination's Shareholders which the Imagination directors are intending to recommend unanimously. Imagination has made excellent progress both operationally and financially over the last 18 months until Apple's unsubstantiated assertions and the subsequent dispute forced us to change course.

The acquisition will ensure that Imagination - with its strong growth prospects - remains an independent IP licensing business, based in the UK, but operating around the world," said Andrew Heath, Chief Executive Officer of Imagination.

The sale of the IP licensor Imagination Technologies leave us with some questions.

It is not clear whether Canyon Bridge will be allowed to have access to MIPS CPU IP. Chinese vendors have been using MIPS for years and Beijing has reportedly said it wants to use MIPS architecture for all future government-sponsored projects.

The MIPS CPU business includes all MIPS intellectual property and patents. The MIPS IP and patents were developed in the United States and they belong to Imagination's U.S. business unit. This could mean that Imagination's MIPS divestment to Tallwood could trigger a review by the Committee on Foreign Investment in the United States (CFIUS).

Canyon Bridge was founded by Benjamin Chow. With more than 20 years of private equity, venture capital, senior management and technology R&D experience, Chow is well connected to both China and Silicon Valley.

Chow set up Canyon Bridge in summer 2016 with funding from China Reform Management, a state-owned investment firm that became Canyon Bridge's sole investor.

On the Tallwood front, general partner Luis Arzubi is an ex-IBMer who spent more than three decades at IBM's Microelectronics Division. Prior to joining Tallwood, Arzubi served as the unit's vice president and general manager. He was responsible for all semiconductor business segments at IBM.