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By Pav Jordan
Fri Oct 28, 2011 8:45am EDT
(Reuters) - An agreement by a private equity firm to buy Mosaid Technologies for C$590 million ($594 million) includes core wireless patents controlled by the Ottawa-based target company as part of a recent deal with Nokia and Microsoft.
Mosaid acquired about 2,000 patents from Nokia and Microsoft in a deal that closed in September, just weeks after Wi-Lan Inc made a C$532 million hostile bid that the licensing company said was too low.
Mosaid and Sterling Partners, a U.S. based private equity firm, announced a friendly, C$46-a-share takeover deal late Thursday, trumping Wi-Lan's C$42-a-share bid. Wi-Lan has declined comment on Sterling's offer.
Mosaid has contended that the Wi-Lan offer failed to account for the value of the Nokia-Microsoft patents. It has insisted that agreement was not designed to block the Wi-Lan bid and had been in the works for months.
That said, the deal necessarily complicates any takeover of Mosaid because a change of ownership of the new patents would have to be approved by Microsoft and Nokia.
The requirement has been satisfied, according to Sterling's statement on Friday.
"Nokia and Microsoft have agreed to deliver consent to change of control, allowing retention of Core Wireless portfolio by Mosaid," the private equity firm said.
Mosaid, which generates revenue by developing and licensing intellectual property, paid nothing for the Nokia and Microsoft patents. But it will shoulder the costs of reaching licensing agreements with other companies and take a one-third cut of any of those deals.
It said at the time that the patents could generate revenue in excess of all revenue the company had made in its previous 35 years in business.
Mosaid Chief Executive John Lindgren has said the wireless patents were more valuable than those included in a $4.5 billion package of patents belonging to bankrupt Nortel Networks. That package was auctioned off to a consortium including Apple, Microsoft and Research In Motion.
Sterling, with some $5 billion in assets under management, said on Friday its deal with Mosaid was expected to close in December or January. It also said it had reached employment agreements with Mosaid's Lindgren and other members of the company's executive, but did not elaborate.
"Mosaid is a leader in managing intellectual property," said Chris HoehnSaric, co-founder and senior managing director at Sterling. "It is fundamentally important work and Sterling Partners is committed to making the necessary investments to help Mosaid realize its full potential."
Mosaid shares closed up 0.51 percent at C$43.42 a share in Toronto on Thursday, before the Sterling bid was announced.
($1= $0.99 Canadian)
(Reporting by Pav Jordan; Editing by Frank McGurty)
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