US wireless technology firm InterDigital, Inc. said it made a binding offer to purchase the patent licensing business of French media and entertainment company Technicolor for $150 million in cash “plus future contingent consideration.”
Technicolor said the transaction values the patent licensing business at $475 million.
InterDigital said it will will acquire Technicolor’s portfolio of more than 21,000 patents and applications across a broad range of technologies, including more than 2,500 worldwide video coding patents which will complement InterDigital’s existing portfolio of 19,000 patent assets in wireless, video and other technologies.
InterDigital will pay Technicolor $150 million in cash up front, and 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.
InterDigital would also grant back to Technicolor a perpetual license for patents acquired in the transaction.
“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,” said InterDigital.
The transaction is expected to close in mid-2018.
“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,” added InterDigital.
Technicolor CEO Frederic Rose said: “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.”
InterDigital CEO William Merritt said: “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.”
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.