Apple and Microsoft Win Nortel Patent Portfolio in $4.5 Billion Auction

In a joint effort, Apple and Microsoft, under the Rockstar Bidco umbrella, acquired the patent portfolio of Nortel Networks, valued at $4.5 billion, in a historic auction. Judge Kevin Gross in Delaware and Judge Geoffrey Morawetz in Toronto granted the necessary approvals for the sale of over 6,000 patents and applications related to wireless and Internet technology. This move was confirmed as a significant "wow" transaction by David H. Botter, an attorney for Nortel's unsecured US creditors. After Nortel filed for bankruptcy in 2009, the company had sold its businesses, raising about $3 billion before the June patent auction. The patent portfolio, the last significant asset remaining, will contribute to creditor recoveries. The sale is expected to be finalized within 30 days.

Key Takeaways:

• The patent portfolio, comprising more than 6,000 patents and applications, was sold to Rockstar Bidco, a joint venture between Apple and Microsoft, after an intense 19-round bidding process.
• Google initially signed a contract to be the stalking-horse bidder with a guaranteed offer of $900 million but was eventually outbid by the increased offers.
• The winning bid of $4.5 billion from Rockstar Bidco surpassed Google's initial offer, with Intel and Google forming a partnership in the later rounds of bidding.
• Breakup fee guarantee was included for Google in the contract, entitling them to $25 million plus expenses, regardless of the outcome.
• Competitors Apple, Google, Intel, Research In Motion (RIM), Sony, Ericsson, and EMC formed an alliance for the purchase of the patent portfolio.
• The sale of the patent portfolio was the culmination of Nortel's business dissolution process that began in 2009.

Statistics:

• The patent portfolio consisted of more than 6,000 patents and patent applications.
• The sale was valued at $4.5 billion.
• Google's initial stalking-horse bid was $900 million.
• Breakup fee guarantee for Google: $25 million plus expenses.
• Duration of the auction: June 27 to June 30.
• Number of rounds of bidding: 19.

Sources:

• Muscat Press and Publishing House SAOC 2011
• Syndigate.info an Albawaba.com company