Technicolor has agreed to sell its patent licensing business to mobile technology research and development company, InterDigital, in a deal that values the business at US$475 million (€390 million).
The research agreement will see InterDigital Labs and Technicolor R&I Lab collaborate to develop research programs around video coding, connected home and immersive technologies.
The InterDigital deal covers all of Technicolor’s patent portfolio – excluding some mobile and patent pool-associated patents, and a small number of patents for nascent technologies.
It covers Technicolor’s interest in its joint-licensing program with Sony for digital TVs and computer display monitors, as well as certain royalty-bearing contracts.
Technicolor said it will retain a few contracts, notably those related to patent pools such as MPEG LA and HDMI.
Technicolor will receive a US$150 million upfront payment, whilst also receiving 42.5% of all future cash receipts from InterDigital’s licensing activities in the consumer electronics field, which it estimates has a net present value of around US$215 million.
Technicolor and InterDigital will also enter into a ‘perpetual grantback licensing agreement’, which will allow Technicolor to benefit from existing and future patents, an agreement which it estimates has a value of US$108 million.
The research agreement will see InterDigital pay Technicolor US$5 million annually and invest an additional US$5 million per year in internal R&D projects that are aligned with the priorities of both companies.
“This agreement will allow us to fully focus on our core operating businesses and includes a collaborative research program built up on the strength of our research and innovation teams,” said Frederic Rose, Technicolor’s CEO.
“In InterDigital, a worldwide leader in patent licensing, we have found the right partner for our patent licensing business. Going forward, we will benefit from the demonstrated strength of InterDigital’s focused, R&D-backed licensing business to collect future revenue streams.”
InterDigital president and 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 applicable markets.”
The news comes after Technicolor said in December that it was in advanced negotiations to sell its patent licensing business, as part of its plan to simplify the group’s structure and allocate capital and resources to its operating business.
The deal is expected to close in mid-2018 following customary closing conditions.
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22nd February 2019