Shares in Mosaid Technologies shot up nearly 25 per cent on the Toronto Stock Exchange after the Ottawa patent licensing company told shareholders to hold off tendering their stock to a hostile bid by rival company Wi-LAN Inc.
Mosaid stock was up $7.85 to $39.50 early Thursday in the first trading session since Wi-LAN Inc. announced its takeover bid after markets closed on Wednesday.
Ottawa-based Mosaid says its board is evaluating the Wi-Lan offer and “will respond in due course.”
Mosaid has rebuffed merger talks with Wi-Lan several times in recent years.
“Mosaid’s board of directors recommends that shareholders take no action until shareholders have received further communications” from the company, it said.
Wi-Lan announced after markets closed Wednesday it will make a $480-million hostile cash takeover bid for Mosaid and take the bid directly to Mosaid shareholders.
If successful, the transaction would combine Canada’s two leading patent companies.
Wi-LAN and Mosaid generate most of their revenue by licensing technology rights to large telecom and computer chip makers, which have recently demonstrated that they’re willing to pay hundreds of millions or even billions for patents.
“It is my belief that to succeed in today’s market, bigger is better,” Wi-LAN chief executive Jim Skippen said in a statement after markets closed.
“We will be presenting this offer directly to Mosaid shareholders for their consideration as we strongly believe that the complementary patent portfolios, diverse licensing programs, experienced teams and innovative research and development of Wi-LAN and Mosaid make this a compelling combination,” Mr. Skippen said.
Wi-LAN said it will pay $38 in cash for all of the outstanding common shares of Mosaid, a premium of about 31 per cent over the closing price of Mosaid shares.
Wi-LAN shares were off 5 per cent, or 36 cents, to $6.73 in Toronto.