Patent licensing firm Wi-LAN Inc. extended its $480-million hostile takeover offer for Mosaid Technologies Inc. on Thursday until Nov. 1.
The extension of the bid, which had been set to expire on Friday, came a day after the Ontario Securities Commission ruled that it would allow Mosaid the protection of a shareholder rights plan until Nov. 1.
“The decision now affords Mosaid shareholders the opportunity to consider and accept Wi-LAN’s offer,” Wi-LAN said in a statement.
For its part, Mosaid, also an Ottawa-based patent licensing company, has said that an unidentified private equity firm is considering a takeover offer that would be “meaningfully superior” to the $38 per share bid by its cross-town rival.
Mosaid repeated its call to shareholders Thursday not to tender to the Wi-LAN offer as it works to find a richer alternative.
“By tendering to Wi-LAN’s inadequate bid, shareholders may foreclose an opportunity to benefit from a possible value-enhancing alternative,” the company said.
In an affidavit Wednesday, Neil Selfe, an investment banker hired by Mosaid to help fend off the unsolicited Wi-LAN offer, said the unnamed bidder needs four to six weeks to review the company, negotiate a deal and settle financing before making an offer.
“The potential bidder is a substantial private equity firm with an international presence, over $5-billion of capital under management and noted previous success investing in Canadian public companies in competitive situations,” Mr. Selfe said in the affidavit to the OSC hearing Wednesday.
BMO Capital Markets analyst Brian Piccioni, who has a $49 price target on Mosaid, called the news “potentially positive” in a brief note to clients.
Technology patents have become valuable assets in the telecom and wireless technology business.
In its ruling Wednesday, the OSC said it was “satisfied that the shareholder rights plan is still serving a purpose by providing an opportunity for continuing the auction process, which may enhance shareholder value.”
A shareholder rights plan usually makes it prohibitively more expensive for an unwanted bidder to succeed in a hostile takeover because it floods the market with new shares or imposes other conditions.
Companies like Mosaid and Wi-LAN generate revenue by licensing technology rights to large telecom and computer chip makers, which have recently demonstrated a willingness to pay millions or even billions of dollars for patents.
Google Inc. paid a 63 per cent premium for Motorola Mobility, mainly to get its hands on its 17,000 patents, while a group including Research In Motion Ltd., Microsoft Corp., and Apple Inc. spent $4.5-billion (U.S.) in June to buy 6,000 patents owned by Nortel Networks.Report Typo/Error
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