A little twist in the fate of MOSAID, the company that in September agreed to take over the management of 2,000 Nokia (NYSE: NOK) patents for a cut of the proceeds. The company is getting bought out by a private equity firm, Sterling Partners, for $590 million. That will mean that Mosaid gets to avoid a hostile takeover from fellow Canadian patent holder, WiLAN.
Mosaid says in a release that Sterling is buying out the company for $46 a share, a premium of 9.5 percent on the $42 per share offered by WiLAN. It also represents a premium of 43.5 percent on the stock price of the company as of August 17, the day before WiLAN made its offer for MOSAID.
MOSAID has agreed to a break fee of $22 million if the deal does not go through; and that it will suspend its quarterly dividend as the transaction goes through.
MOSAID in September is understood to have paid nothing to take on the management of the patents belonging to Nokia, which it picked up via its acquisition of Core Wireless. Instead, it will keep one-third of any of the licensing payments that it collects on behalf of Nokia.
What’s interesting is that it seems that while these 2,000 patents were Nokia’s in name at the time of the transaction — with no mention of Microsoft (NSDQ: MSFT) in the news of the original deal — now their transfer to Sterling seemed to require the approval of both Microsoft and Nokia: this article in Reuters notes that the approval of both has already been granted. We are reaching out to Nokia and Microsoft to clarify why this is the case.
Update: A Nokia spokesperson, for the record, offers no detail on this: “The terms of the original transaction were confidential, so I cannot comment on those nor at present on any potential acquisition of MOSAID,” he wrote in an email. We have also tried to contact Sterling Partners to ask about this detail.
Technology patent enforcement is big business these days. And the value of these Nokia patents is potentially very big: MOSAID’s CEO, John Lindgren, has said that the revenue that MOSAID could generate from the licensing could exceed $1 billion, or all the revenue that MOSAID has made since first being established in 1975.
Meanwhile, this appears to be a new line of investments Sterling. Up to now, according to its list of portfolio companies, the private equity firm has focused on education, senior care facilities, and a smattering of real estate and enterprise services.
MOSAID said the deal is expected to close in December or January of this year.