The patent war is fierce and many companies have decided to extend their patent portfolios by buying patents from others. Microsoft will be doing just that in a deal with AOL.
They'll be buying 800 patents from AOL, who will be left holding 300 more. As part of the deal, Microsoft will also get a non-exclusive license for those remaining patents. The bill will be just over $1 billion for the whole thing.
Microsoft didn’t just jump into this deal - they've been following AOL's portfolio for years and spent several months to study it in detail.
The purchase had a really positive effect on the AOL stock, which jumped 37% - from the $18.42 it closed on Friday to $25.16.
The deal should be finalized by the end of this year and a big chunk of the cash is expected to go to shareholders. Should the deal fail, Microsoft will have to cough up $211.2 million to AOL.
An AOL unit will also be sold as part of the deal and recorded as a capital loss (it's a tax thing).
What a clever show M$ & AOL. You think you can fool us. All you Feddie companies will go down the drain.
They must have forgotten about their coupons, 'else it would have been 1000 patents for the same price