United Kingdom

China abandons bid to seize control of Imagination Technologies

Chinese investors have abandoned an attempt to seize control of a British technology star after a furious backlash in Westminster.

A board meeting at Apple iphone chip maker Imagination Technologies would have seen China Reform parachute in four directors yesterday – effectively giving it power over the business.

But it was cancelled after senior MPs called on ministers to intervene. China Reform is the biggest investor in Cayman Islands-based Canyon Bridge, which bought Imagination for £550million in 2017 despite fears that the deal handed too much power to the Chinese.

The attempted coup suggests these concerns were not taken seriously enough – and raises fresh questions about the takeover of British firms by foreign companies 

The attempted coup suggests these concerns were not taken seriously enough – and raises fresh questions about the takeover of British firms by foreign companies.

It has been claimed that China Reform wanted to move Imagination and its cutting-edge intellectual property to China despite assurances it would stay in Britain.

China Reform’s move has prompted a Whitehall investigation ‘to understand the facts’, involving the culture and business departments, the Foreign Office, the Cabinet Office and spying agency GCHQ.

Oliver Dowden, the Culture Secretary, has told MPs that he is seeking an urgent meeting with Imagination’s bosses and its owners. 

Officials sprang into action after Tory grandees David Davis and Iain Duncan Smith, as well as four Parliamentary select committee chairmen, demanded protection of an ‘important British strategic asset’.

In a letter to them, Dowden said: ‘The Government takes this issue extremely seriously and I want to reassure you that this matter is being looked at closely.

‘I can assure you that we will not hesitate to use all the tools available to us to mitigate any adverse impacts for the UK.’ 

Imagination, founded in 1985, is a jewel in Britain’s crown, making microchips used in billions of products from smartphones to wireless speakers.

But it was laid low in 2017 after Apple said it was ditching the firm as a supplier. The iPhone maker has since started working with it again.

But the crisis sent Imagination’s shares crashing, with Canyon Bridge later scooping it up for £550million, despite concerns voiced about the firm’s Chinese backers. 

Canyon Bridge was based in the US at the time but has since relocated to tax haven the Cayman Islands.

Its biggest investor, China Reform, has links to the Beijing government and security experts and MPs warned that the sale was part of an effort to create a microchip monopoly which could leave Western countries dependent on its technology.

At the time, ministers nodded through the deal after assurances that China Reform would be a passive investor and that Imagination’s intellectual property and business would stay in the UK.

But as the coronavirus forced the Government into crisis mode, it emerged that China Reform was plotting to take control by appointing four directors. It planned to use this influence to move Imagination and its assets to China, Sky News reported.

The board meeting scheduled for yesterday was abandoned, however, and the Whitehall investigation will pile pressure on the Chinese investor to back away.

The attempted coup comes just months after a furore over whether Chinese telecoms giant Huawei should be allowed to supply kit for 5G mobile networks.

Matthew Henderson, Asia expert at the Henry Jackson Society, said: ‘Presumably, China Reform and Canyon Bridge hoped it might slip through in the chaos caused by the pandemic.’ He called for more ‘defences’ to be put up around UK firms and universities to protect sensitive technologies.

Dowden has promised new laws will soon give ministers stronger powers to intervene but action has been promised in various guises since 2017.

Football news:

Ex-city defender Onuoha: I never felt safe in the US. If the police don't like it, you can lose your life
Barcelona wants to bring back 19-year-old Manchester City defender Garcia. The English are not going to let him go
Gianni Infantino: We must all say no to racism and violence. In any form
Barcelona for 4.5 million euros will buy 70% of the rights to 19-year-old forward Sao Paulo Maya
Martin Ødegaard: Sociedad wants to get into the Champions League is a dream. It's hard to fight Real Madrid and Barca, but we can fight the rest
Newcastle midfielder Longstaff is close to a move to Udinese. His salary will increase by more than 30 times
Milan defender Duarte was injured. This is the second injury at the club after resuming training