- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
AOL said it has reached a definitive agreement to sell more than 800 of its patents to Microsoft and to grant the software giant a non-exclusive license to its retained patent portfolio for total proceeds of $1.056 billion in cash.
Activist hedge fund and AOL shareholder Starboard has recently called for a more aggressive patent strategy, with AOL management responding that it was working on patent deals.
Following the Microsoft news, Miller Tabak analyst David Joyce reiterated his “buy” rating on AOL’s stock and raised his price target to $30, saying that “domestic display [advertising] is growing and value Is being unlocked” via the patent deal.
Barclays Capital analyst Anthony DiClemente said about the patent deal: “We view this as very bullish for AOL as it shows quick follow-through on a promise to monetize its patent portfolio – and for more money than the Street had been expecting – while also potentially providing an incremental about $11 per share to return in the form of [stock] buybacks or a one-time dividend.”
AOL’s stock in early trading was up 42.6 percent at $26.27 after earlier hitting a 52-week high of $26.69.
The Microsoft deal is expected to be completed by the end of 2012. “The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said AOL chairman and CEO Tim Armstrong. “We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.”
Sign up for THR news straight to your inbox every day