(Reuters) – AOL Inc (AOL.N) said it would sell over 800 of its patents and
related applications to Microsoft Corp (MSFT.O),
and would grant Microsoft a non-exclusive license to the patents it retains, for slightly over $1 billion in
cash.
outside of the building housing the companies corporate headquarters in New York May 28, 2009. REUTERS/Lucas Jackson
AOL’s shares jumped 37 percent to $25.16 in trading before the bell on Monday. They closed at $18.42
on Friday on the New York Stock Exchange.
The Internet company said it plans to return a “significant portion of the
sale proceeds” to shareholders.
AOL will continue to hold over 300 patents including advertising, search, and mapping,
and said it received a license to the patents being sold to Microsoft.
“This is a valuable portfolio that we have been
following for years and analyzing in detail for several months,” Microsoft’s General Counsel Brad Smith said.
Last
month, media reports said that AOL had hired Evercore Partners after being pushed by activist shareholder Starboard Value LP
who believed the company’s patent portfolio could produce more than $1 billion in licensing income if properly
monetized.
The transaction, which is expected to be completed by the end of 2012, includes the sale of an AOL unit on
which AOL expects to record a capital loss for tax purposes.
Evercore Partners and Goldman Sachs acted as financial
advisors to AOL. Wachtell, Lipton, Rosen & Katz and Finnegan, Henderson, Farabow, Garrett & Dunner acted as legal
counsel.
If the deal falls through, Microsoft will pay AOL a termination fee of $211.2 million, AOL said in a
regulatory filing.
(Reporting by Sayantani Ghosh in Bangalore; Editing by Supriya Kurane)