A takeover battle between two Ottawa patent licencing companies is apparently over after WiLAN
Inc. said it won’t try to beat the offer of an American private equity firm for Mosaid Technologies Inc.
WiLAN said Monday it won’t go further than the $42 a share offer it made for Mosaid, which is substantially less than the $46 a share offer – a total of $590 million for all outstanding shares -- from Sterling Partners that Mosaid’s board accepted last week.
If the deal is confirmed by shareholders, the federal Competiton Bureau and Industry Canada, Mosaid would be taken private.
Mosaid owns thousands of semiconductor memory and wireless patents. About 70 per cent of the $80.5 million in revenues from its last fiscal year came from memory licence fees, and the rest from wireless.
A spokesman for Mosaid said deal with Sterling shouldn’t be seen as the loss of Canadian-owned intellectual property.
“The way to look at it is – assuming the Sterling deal goes through – we have a U.S. owner. The company remains headquartered in Ottawa, continues to do business as Mosaid with the current executive team remaining in place,” said Michael Salter, Mosaid’s senior director of investor relations and corporate communications.
“We think it’s a pretty good outcome because unlike in some situations where there’s massive changes and the head office functions depart Canada, that’s not going to be the case here.”
A shareholder vote is expected either in late December or early January. Two-thirds of shareholders have to approve the deal for it to go ahead.
WiLAN, which had $50 million in revenue last year from a range of communications and consumer produce licences and patents, couldn’t be reached for comment.
It began its fight for Mosaid in August, offering $38 a share for all shares, a total of $480 million.
Patents are usually considered dull assets, but not today, especially in the exploding wireless industry. Research In Motion found that out the hard way when it had to pay US$612 million in 2006 to settle a patent fight with NTP. Since then bankrupt Nortel Networks pulled in $4.5 billion for its patents, and in August Google Inc. paid US$12.5 billion for Motorola Mobility – largely, analysts said, for its wireless patents.
In September Mosaid [TSX:MSD] bought Core Wireless Licensing S.a.r.l., a Luxembourg company that holds a portfolio of 400 patent families, consisting of approximately 2,000 wireless patents and patent applications originally filed by Nokia. Mosaid estimated that revenues from licencing them will exceed the $1 billion in revenue it has pulled in since forming in 1975.