UK based chip manufacturer for phones and tablets, Imagination Technologies has agreed to buy California-based chip designer, MIPS Technologies for $60m to compete against domestic peer Arm Holdings.
Under the deal, Imagination Technologies will acquire the operating business and certain patent portfolio, as well as license rights to all of the remaining patent properties of MIPS which designs CPU (central processing unit) processor architectures and cores.
The deal include acquisition of 82 key patent properties of "Retained Patent Properties" and license rights to all of the remaining 498 MIPS' patent properties under the "Divested Patent Properties".
Imagination Technologies CEO Hossein Yassaie said IPS architecture is complementary to company's existing CPU capabilities.
"Post deal closure, Imagination will continue to support and expand the MIPS architecture and ecosystem, with the combined effort aiming to create a new industry-leading force in CPU development and licensing," Yassaie said.
In another deal, MIPS Technologies will sell 498 of its 580 patent assets for $350m to Bridge Crossing, which is an acquisition vehicle Allied Security Trust.
The consortium which is buying the patent portfolio also include Arm Holding and MIPS will retain the remaining 82 patents that directly relevant to the MIPS architecture, and will also receive a royalty for the patents sold to Bridge Crossing.
MIPS CEO Sandeep Vij said after a review of a wide range of alternatives the company decided to sale patent properties.
"Importantly, as part of Imagination, the MIPS architecture will continue to be supported, and protected by MIPS patents," Vij said.
As a member of Bridge Crossing, a consortium affiliated with Allied Security Trust, Arm Holding will contribute $167.5m for the acquisition which it will pay from its cash reserve.
Arm CEO Warren East said the company is a leading participant in this consortium and the acquisition presents an opportunity for companies to neutralise any potential infringement risk from these patents in the further development of advanced embedded technology.
"Litigation is expensive and time-consuming and, in this case, a collective approach with other major industry players was the best way to remove that risk," East said.
The transaction is expected to close in the first quarter of 2013.