Shares in the Kings Langley-headquartered chip manufacturer have soared by more than 40% since the news broke late last week.
Imagination Technologies, which manufactures computer chips for the likes of Apple, has become the latest UK firm to be snapped up by Chinese investors.
The company has been bought by China-backed private equity firm Canyon Bridge in a deal worth £550m, valuing shares at 182p.
The decision to invest in Imagination comes after Canyon Bridge was blocked from buying US firm Lattice Semiconductor by Donald Trump due to ‘national security concerns.’
However, although the takeover of Imagination would need regulatory approval, it is not expected to hit any snags.
Janardan Menon of investment bank Liberum, said: “While the UK and EU governments could oppose the deal, we believe it is unlikely given the state of the business, the thorough sale process that it has gone through where all options have been explored, and the lack of government objection to other recent sales such as Sepura to a Chinese entity. Canyon Bridge also plans to maintain the UK headquarters of the business.”
Imagination put itself up for sale back in June after Apple informed the company it would stop using its chips in its smartphones as of 2019.