InterDigital makes binding offer to acquire Technicolor’s patent licensing business, will collaborate with technicolor on video research
Mar 2, 2018
Company Release - 3/1/2018 1:00 PM ET
Acquisition of Technicolor’s seminal portfolio would dramatically expand InterDigital’s technology footprint in mobile devices
Transaction also opens new markets in consumer home electronics, display technology and video
Combined research-backed portfolio of approximately 40,000 patents and patent applications would represent one of the strongest in the technology industry
WILMINGTON, Del., March 01, 2018 (GLOBE NEWSWIRE) -- 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.”
- 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:
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