After filing bankruptcy just over two years ago, Nortel Networks Corp. is looking to sell its patent portfolio. It was announced today that the Company, through its principal operating subsidiary Nortel Networks Limited and certain other subsidiaries, has entered into a “Stalking Horse Agreement” with industry behemoth, Google, Inc. (NASDAQ: GOOG), to sell approximately 6,000 patents and patent applications covering a broad range of wired, wireless and digital communication technologies to Google for a cool $900 million in cash. This agreement, which is still subject to court approvals in the United States and Canada, follows a confidential, multi-round bidding process involving several interested companies and consortia from around the world.
A “stalking horse agreement” refers to an attempt by a debtor to test the market in advance of an auction with the intent is to maximize the value of its assets subsequent to (or as part of) a bankruptcy court-approved auction process.
George Riedel, Chief Strategy Officer and President of Business Units for Nortel, commented, “This is an unprecedented opportunity to acquire one of the most extensive and compelling patent portfolios to ever come on the market. We look forward to what we hope will be a robust auction, following the requisite court approvals, currently expected to be held in June 2011.”
Nortel, once a leader in the industry, holds an extensive patent portfolio enveloping nearly every aspect of telecommunications and other markets, including internet search and social networking. The agreement includes the planned sale of approximately 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios.
Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.
Shareholders should not get their hopes up even with the nearly $1 billion number being tossed around.
Nortel does not expect that the Company’s common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.
This is all part of Nortel trying to pay their debts. In July 2009, Telefon AB L.M. Ericsson purchased Nortel Networks Corp.’s CDMA business, the Company’s most-profitable unit that sold a key wireless voice technology used extensively in the U.S., for $1.13 billion as high bidder in a stalking horse offer. That deal also included a group of 400 researchers working on a high-speed broadband technology called LTE.
More information can be found on Nortel at www.nortel.com