InterDigital Makes Binding Offer to Acquire Technicolor’s Patent Licensing Business, Will Collaborate With Technicolor on V...
March 01 2018 - 12:00PM
InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and
development company, today announced that it has made a binding
offer to purchase the patent licensing business of Technicolor
(Euronext Paris:TCH) (OTCQX:TCLRY), a worldwide technology leader
in the media and entertainment sector, for $150 million in cash
plus future contingent consideration. The combination of
InterDigital’s and Technicolor’s licensing businesses in the
increasingly complementary areas of mobile technology and video
technology will create a world-leading R&D-based licensing
enterprise.
In order to accommodate French labor law, InterDigital has made
an irrevocable offer to Technicolor and certain of its subsidiaries
to purchase Technicolor’s patent licensing business. After
completing the required prior consultation with Technicolor’s works
council, the companies expect to execute a definitive acquisition
agreement, the terms of which have been negotiated. The transaction
is expected to close in mid-2018, subject to conditions relating to
consent of Technicolor’s partners, customary closing conditions and
regulatory approvals.
The transaction would dramatically expand InterDigital’s
technology footprint in mobile devices, and also provide a platform
for InterDigital to address new markets in home consumer electronic
devices, including set-top boxes, displays and video streaming
devices. While the current contracted revenue of the acquired
business from Technicolor is much lower than its historical levels,
InterDigital believes there is substantial unlocked licensing value
in the Technicolor portfolio. The company also expects the net
impact of the transaction on its core operating expenses to be
modest. Consequently, the company expects the transaction to
drive significant shareholder value, through the deployment of the
acquired assets into both current license discussions and new
license discussions in additional markets.
Commenting on the transaction, Frederic Rose, Technicolor’s CEO
stated: “This agreement would provide us with additional resources
to be more focused on strengthening our position in our core
operating businesses and includes a collaborative research program
that would further fuel the competitive advantage of operating
activities. In InterDigital, I am convinced that we have found the
right partner for our patent licensing business. As a focused,
R&D-backed licensing business with a strong industry
reputation, InterDigital is well positioned to unlock the potential
of our strong intellectual property and innovation.”
William J. Merritt, President and CEO of InterDigital, added:
“Technicolor has long been a world-leading research contributor in
key technology areas; there is no one like them in video
technologies. For InterDigital’s mobile device customers, the
combination will mean greater value, and a broader range of
technologies that can form the basis for partnership,
collaboration, and deeper, more productive relationships. The
transaction also rapidly expands our addressable markets. Among the
added value will be the combined research capability of Technicolor
and InterDigital, who deeply respect each other’s research
capabilities and anticipate strong results from the collaboration
between the two companies.”
Transaction Highlights
- InterDigital will acquire Technicolor’s portfolio of more than
21,000 patents and applications across a broad range of
technologies, including over 2,500 worldwide video coding patents,
which will complement InterDigital’s existing portfolio of
approximately 19,000 patent assets in wireless, video, and other
technologies.
- InterDigital will deploy the acquired assets into its existing
mobile industry licensing efforts, and extend its licensing program
to new activities in the consumer electronics field.
- InterDigital will assume Technicolor’s role as the exclusive
licensing agent for the joint licensing program with Sony related
to display technology.
- Technicolor’s global team of licensing experts, patent managers
and support staff will join InterDigital and work with its existing
licensing team to license the expanded patent portfolio.
- InterDigital will pay Technicolor $150 million in cash up
front. Technicolor will also receive 42.5% of all future cash
receipts (net of estimated operating expenses) from InterDigital’s
new licensing efforts in the consumer electronics field. There is
no revenue sharing associated with InterDigital’s mobile industry
licensing efforts.
- As part of this transaction, InterDigital would also grant back
to Technicolor a perpetual license for patents acquired in the
transaction.
Research and Development Cooperation
InterDigital and Technicolor will also engage in jointly-funded
R&D to supplement InterDigital’s portfolio, which the companies
plan to evolve and strengthen over time. The R&D
collaboration will bring together the efforts of hundreds of
engineers in InterDigital Labs and Technicolor Research and
Innovation (R&I), and will leverage Technicolor’s recognized
leadership in video, media and entertainment, and InterDigital’s
recognized leadership in mobile, IoT and video. InterDigital will
own the patents related to the joint research, and Technicolor will
receive a license back to the assets resulting from the targeted
research conducted by R&I.
Evercore is serving as financial advisor, and Wilson Sonsini
Goodrich & Rosati and Jeantet are serving as legal counsel to
InterDigital. Macquarie Group is serving as financial advisor, and
Cravath, Swaine & Moore LLP is serving as legal counsel to
Technicolor.
A video of Frederic Rose and William J. Merritt discussing the
transaction can be accessed at:
https://www.interdigital.com/videos/technicolor---interdigital
About InterDigital®InterDigital develops
technologies that are at the core of mobile devices, networks, and
services worldwide. We solve many of the industry's most critical
and complex technical challenges, inventing solutions for more
efficient broadband networks and a richer multimedia experience
years ahead of market deployment. InterDigital has licenses and
strategic relationships with many of the world's leading wireless
companies. Founded in 1972, InterDigital is listed on NASDAQ and is
included in the S&P MidCap 400® index.InterDigital is a
registered trademark of InterDigital, Inc.
For more information, visit: www.InterDigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements include information regarding our
current beliefs, plans and expectations, including, without
limitation, (i) our plans to acquire Technicolor’s patent licensing
business; (ii) our expectation that we will execute a definitive
acquisition agreement; (iii) our expectation that the transaction
will close in mid-2018; (iv) our belief that the acquisition will
result in one of the strongest patent portfolios in the technology
industry and create a world-leading R&D-based licensing
enterprise; (v) our belief that there is substantial unlocked
licensing value in the Technicolor portfolio; (vi) our expectation
that the net impact of the transaction on our core operating
expenses will be modest; (vii) our expectation that the transaction
will drive significant shareholder value; (viii) the anticipated
strong results from the collaboration between the two companies;
and (ix) our plan to engage in jointly-funded R&D with
Technicolor that we plan to evolve and strengthen over time. Words
such as "believe," "anticipate," "estimate," "expect," "project,"
"intend," "plan," "forecast," "goal," “envision” and variations of
any such words or similar expressions are intended to identify such
forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties. Actual outcomes could differ materially from those
expressed in or anticipated by such forward-looking statements due
to a variety of factors, including, without limitation, those
identified in this press release, as well as the following: (i)
regulatory or other limitations on the ability of the parties to
consummate the transaction; (ii) our ability to leverage the
acquisition and strategic relationship to extend our current
licensing program into new activities; (iii) unexpected delays or
difficulties related to the development of the parties’
technologies; (iv) unanticipated delays or difficulties in the
execution of patent license agreements; and (v) the finalization of
accounting and valuation analyses related to the transaction.
InterDigital undertakes no duty to update publicly any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as may be required by applicable
law, regulation or other competent legal authority.
InterDigital Contact:Patrick Van de WilleEmail:
patrick.vandewille@InterDigital.com +1 (858) 210-4814
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