AOL has inked an amazing deal with rival Microsoft to sell 800 of their patents to the Redmond based computer giant. The deal is said to be worth $1 billion dollars and includes licensing back to AOL.
AOL stock closed at $18.42 on Friday and skyrocketed to $25.16 on the news of the patent sale. While Tim Armstrong is taking much of the credit for the patent sale it was actually sparked by activist shareholder Starboard Value LP who had said earlier on that, if structured properly, AOL could stand to earn $1 billion dollars or more off it’s treasure trove of patents.
Obviously it was structured properly.
AOL is holding onto 300 of their patents which revolve around some of their current core business’ like maps, and search.
“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” Microsoft’s General Counsel Brad Smith said in a statement.
The patent transaction is expected to close by the end of 2012 and has a sweetheart breakup clause as well. Should the sale not go through, Microsoft will be on the line to AOL for $211.2 million dollars.
Analysts are hopeful that this influx of cash from the sale of it’s patents will help AOL continue to rebuild it’s core business units.