U.S. chip designer MIPS is fielding other requests to buy the company out, despite previously saying it would be acquired by British microprocessor and communications technologies firm.
First reported by the Reuters news agency, Imagination Tech faces increased competition after MIPS said on Tuesday that it will begin talks with mobile chip designer CEVA after it offered an "unsolicited" higher bid. Nasdaq-listed CEVA is thought to have offered $75 million for the chip designer, an increase of $15 million on top of what Imagination Tech first offered.
"Imagination is monitoring the situation and will provide a further update in due course," the firm said in a statement seen by Reuters.
Shares in Imagination fell by just shy of 4 percent on the London Stock Exchange following the announcement, but recovered in early trading this morning.
Imagination said in early November that it would buy the firm and acquire the remaining 82 patents, after a separate deal with a patent consortium, which would be licensed back to MIPS on a royalty-free, perpetual license.
The MIPS board, however, still recommends the offer put forward by Imagination and has yet to decide whether CEVA's offer was "superior" to the bid made by Imagination.
MIPS technology can be found in a range of devices, from Blu-ray players, televisions, and video games consoles, such as the PlayStation 2. The firm said earlier this month that the processor architectures and cores that it designs are used for networking and mobile devices -- such as Android smartphones, which MIPS specifically designs chips for -- and powers more than 700 million units worldwide.