InterDigital Makes Binding Offer to Acquire Technicolor’s Patent Licensing Business, Will Collaborate With Technicolor on Video Research

  • Acquisition of Technicolor’s seminal portfolio would dramatically expand InterDigital’s technology footprint in mobile devices
  • Transaction also opens new markets in consumer home electronics, display technology and video
  • Combined research-backed portfolio of approximately 40,000 patents and patent applications would represent one of the strongest in the technology industry

WILMINGTON, Del., March 01, 2018 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and development company, today announced that it has made a binding offer to purchase the patent licensing business of Technicolor (Euronext Paris:TCH) (OTCQX:TCLRY), a worldwide technology leader in the media and entertainment sector, for $150 million in cash plus future contingent consideration. The combination of InterDigital’s and Technicolor’s licensing businesses in the increasingly complementary areas of mobile technology and video technology will create a world-leading R&D-based licensing enterprise.

In order to accommodate French labor law, InterDigital has made an irrevocable offer to Technicolor and certain of its subsidiaries to purchase Technicolor’s patent licensing business.  After completing the required prior consultation with Technicolor’s works council, the companies expect to execute a definitive acquisition agreement, the terms of which have been negotiated. The transaction is expected to close in mid-2018, subject to conditions relating to consent of Technicolor’s partners, customary closing conditions and regulatory approvals.

The transaction would dramatically expand InterDigital’s technology footprint in mobile devices, and also provide a platform for InterDigital to address new markets in home consumer electronic devices, including set-top boxes, displays and video streaming devices.  While the current contracted revenue of the acquired business from Technicolor is much lower than its historical levels, InterDigital believes there is substantial unlocked licensing value in the Technicolor portfolio. The company also expects the net impact of the transaction on its core operating expenses to be modest.  Consequently, the company expects the transaction to drive significant shareholder value, through the deployment of the acquired assets into both current license discussions and new license discussions in additional markets.

Commenting on the transaction, Frederic Rose, Technicolor’s CEO stated: “This agreement would provide us with additional resources to be more focused on strengthening our position in our core operating businesses and includes a collaborative research program that would further fuel the competitive advantage of operating activities. In InterDigital, I am convinced that we have found the right partner for our patent licensing business. As a focused, R&D-backed licensing business with a strong industry reputation, InterDigital is well positioned to unlock the potential of our strong intellectual property and innovation.”

William J. Merritt, President and CEO of InterDigital, added: “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 addressable markets. Among the added value will be the combined research capability of Technicolor and InterDigital, who deeply respect each other’s research capabilities and anticipate strong results from the collaboration between the two companies.”

Transaction Highlights

  • InterDigital will acquire Technicolor’s portfolio of more than 21,000 patents and applications across a broad range of technologies, including over 2,500 worldwide video coding patents, which will complement InterDigital’s existing portfolio of approximately 19,000 patent assets in wireless, video, and other technologies.
  • InterDigital will deploy the acquired assets into its existing mobile industry licensing efforts, and extend its licensing program to new activities in the consumer electronics field.
  • InterDigital will assume Technicolor’s role as the exclusive licensing agent for the joint licensing program with Sony related to display technology.
  • Technicolor’s global team of licensing experts, patent managers and support staff will join InterDigital and work with its existing licensing team to license the expanded patent portfolio.
  • InterDigital will pay Technicolor $150 million in cash up front. Technicolor will also receive 42.5% of all future cash receipts (net of estimated operating expenses) from InterDigital’s new licensing efforts in the consumer electronics field. There is no revenue sharing associated with InterDigital’s mobile industry licensing efforts.
  • As part of this transaction, InterDigital would also grant back to Technicolor a perpetual license for patents acquired in the transaction.

Research and Development Cooperation

InterDigital and Technicolor will also engage in jointly-funded R&D to supplement InterDigital’s portfolio, which the companies plan to evolve and strengthen over time.  The R&D collaboration will bring together the efforts of hundreds of engineers in InterDigital Labs and Technicolor Research and Innovation (R&I), and will leverage Technicolor’s recognized leadership in video, media and entertainment, and InterDigital’s recognized leadership in mobile, IoT and video. InterDigital will own the patents related to the joint research, and Technicolor will receive a license back to the assets resulting from the targeted research conducted by R&I. 

Evercore is serving as financial advisor, and Wilson Sonsini Goodrich & Rosati and Jeantet are serving as legal counsel to InterDigital. Macquarie Group is serving as financial advisor, and Cravath, Swaine & Moore LLP is serving as legal counsel to Technicolor.

A video of Frederic Rose and William J. Merritt discussing the transaction can be accessed at:

About InterDigital®
InterDigital develops technologies that are at the core of mobile devices, networks, and services worldwide. We solve many of the industry's most critical and complex technical challenges, inventing solutions for more efficient broadband networks and a richer multimedia experience years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world's leading wireless companies. Founded in 1972, InterDigital is listed on NASDAQ and is included in the S&P MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations, including, without limitation, (i) our plans to acquire Technicolor’s patent licensing business; (ii) our expectation that we will execute a definitive acquisition agreement; (iii) our expectation that the transaction will close in mid-2018; (iv) our belief that the acquisition will result in one of the strongest patent portfolios in the technology industry and create a world-leading R&D-based licensing enterprise; (v) our belief that there is substantial unlocked licensing value in the Technicolor portfolio; (vi) our expectation that the net impact of the transaction on our core operating expenses will be modest; (vii) our expectation that the transaction will drive significant shareholder value; (viii) the anticipated strong results from the collaboration between the two companies; and (ix) our plan to engage in jointly-funded R&D with Technicolor that we plan to evolve and strengthen over time. Words such as "believe," "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "goal," “envision” and variations of any such words or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are subject to risks and uncertainties. Actual outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including, without limitation, those identified in this press release, as well as the following: (i) regulatory or other limitations on the ability of the parties to consummate the transaction; (ii) our ability to leverage the acquisition and strategic relationship to extend our current licensing program into new activities; (iii) unexpected delays or difficulties related to the development of the parties’ technologies; (iv) unanticipated delays or difficulties in the execution of patent license agreements; and (v) the finalization of accounting and valuation analyses related to the transaction.

InterDigital undertakes no duty to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

InterDigital Contact:
Patrick Van de Wille
+1 (858) 210-4814