UK chip designer Imagination Technologies Group has agreed a major deal to be acquired for approximately £550 million.

The Hertfordshire-based multimedia, processor and communications technology company has recommended an offer by CBFI Investment, a newly incorporated company indirectly owned by a fund managed by US-headquartered Canyon Bridge Capital Partners, to its shareholders.

Imagination’s decision to put the business up for sale follows a decision earlier this year by Apple, its largest customer, to stop using its technology in new devices within two years.

The company has since been locked in a dispute with Apple, which said that it had been working on a separate, independent graphics design to control its products and reduce its future reliance on Imagination’s technology.

“The proposed acquisition is a very good outcome for Imagination’s shareholders which the Imagination directors are intending to recommend unanimously,” chief executive Andrew Heath said in a London Stock Exchange statement.

“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.”

Ray Bingham, partner of Canyon Bridge, added: “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."

In a separate announcement, Imagination said it has entered into an agreement to dispose of its global MIPS CPU business for $65m in cash to Silicon Valley-based venture capital firm Tallwood.