Apple Inc, Microsoft Corp, Research in Motion Ltd and three other leading tech companies received court approval on Monday to buy wireless patents from bankrupt Nortel Networks Corp for $4.5 billion.
Judges in the United States and Canada approved the sale of 6,000 patents and applications, which fetched three times what some analysts expected from the four-day auction in June.
Nortel Networks Corp filed for bankruptcy protection from creditors in January 2009 and courts in the two countries are overseeing the disposal of the company's assets as the former telecommunications giant winds down its operations.
The group of six that won the auction, a collection that bid as Rockstar Bidco LP, also included EMC Corp, Ericsson and Sony Corp.
The auction was record breaking in terms of this case and in the patent industry generally, Lisa Schweitzer of Cleary Gottlieb Steen & Hamilton LLP, which represents Nortel, told a Delaware Bankruptcy Court hearing.
The auction started with a stalking horse bid of $900 million by Google Inc, a company with a relatively small pool of wireless patents in a booming industry increasingly fraught with lawsuits over intellectual property.
The price paid after 19 rounds of bidding indicated the lengths the Apple group was willing to go to thwart the mobile ambitions of Google, according to analysts.
The winning group would likely try to maximize their return on the patents by using them to litigate against others, with Google and its Android mobile phone software first on the list, analysts said.
Also bidding were Intel Corp and RPX Corp, which licenses patents to clients for a fee. Apple initially bid on its own, but partnered with the Rockstar group after round five.
The sale spans wireless, data networking, optical, voice, Internet and semiconductor technologies. The most prized relate to emerging 4G standards such as long-term evolution (LTE).
RECOVERY FOR BONDS?
Several large technology companies such as Verizon Communications Inc and Hewlett-Packard Co objected to the sale. Most objections were resolved by reiterating the sale did not negate licensing agreements involving the patents included in the sale.
Delaware bankruptcy judge Kevin Gross said it would be a $4.5 billion mistake not to approve the sale.
The money will become part of the Nortel estate and will eventually be distributed to creditors that range from suppliers to investors holding the company's bonds.
This is truly a 'wow' transaction, said David Botter of Akin Gump Strauss Hauer Feld LLP, which represents the official committee of creditors.
The transaction is expected to close in about a month, according to Schweitzer.
The Rockstar group got antitrust clearance on June 23 for the transaction. However, the American Antitrust Institute has asked the Justice Department for an in-depth investigation into the consortium's patent portfolio purchase.
This sale fetched a higher price than all of Nortel's other asset sales combined. Nortel has now raised almost $8 billion from asset sales.
The July 1 announcement of the auction outcome pushed some of Nortel's bonds above par, indicating traders are speculating the money from the sale could lead to certain bonds being paid in full.
The hearing was held simultaneously by way of a telecast with the Ontario Superior Court of Justice, where it was approved by Judge Geoffrey Morawetz. Nortel is based in Mississauga, Ontario.
The case is In re: Nortel Networks Inc, U.S. Bankruptcy Court for the District of Delaware, No. 09-10138.
(Reporting by Tom Hals; Additional reporting by Diane Bartz in Washington; Editing by Phil Berlowitz)