MUMBAI: AOL Inc. has consented to sell more than 800 patents and related products to Microsoft Corp. (MSFT) for $1.056 billion as it looks to raise fresh cash for its investors while fighting a boardroom showdown with an activist shareholder.
Shares of AOL surged as much as 45 per cent yesterday hitting their highest point in nearly one and a half years as the company pledged to return a "significant portion" of the sale proceeds to shareholders.
Seeming to address a criticism from activist investor, Starboard Value, the company didn‘t announce how it will distribute the money but said it will share the proceeds.
Under the agreement that was announced, AOL also received a license to the patents being sold to Microsoft. Assuming that the deal materialised at the end of 2011, AOL said that it would have had about $15 a share in cash.
However, the company didn‘t detail the patents sold, although its chief executive Tim Armstrong recently referred to them as "beachfront property in East Hampton."
In general, the value of patents can fluctuate and be arbitrary, and others weren‘t as confident in AOL‘s particular portfolio. The patent-advisory firm M-Cam Inc. had valued AOL‘s holdings at $290 million.
Starboard, which owns around 5.2 per cent in AOL and is mounting a proxy campaign to win seats on AOL‘s board, had said AOL‘s portfolio of more than 800 patents covering Internet technologies could generate more than $1 billion in licensing income "if appropriately harvested."
