Rockstar Bidco LP Wins Nortel Patent Portfolio Auction for $4.5 Billion

Strategic Insights -

In a closely watched patent auction, a consortium led by Research In Motion (RIM), Apple Inc., Microsoft Corp., Sony Corp., Ericsson AB, and EMC Corp., under the name Rockstar Bidco LP, won the right to purchase Nortel Networks Corp.'s patent portfolio for $4.5 billion. The group outbid Google Inc. and defeated Intel Corp., while acquiring over 6,000 patents and applications related to wireless and internet technology. This acquisition is significant, as it marks the end of Nortel's major asset sales, which began after it filed for bankruptcy in 2009 and raised around $3 billion.

Key Takeaways:

  • The Rockstar Bidco LP, a consortium of tech giants, won the Nortel patent portfolio auction with a bid of $4.5 billion, surpassing Google's initial offer of $900 million.
  • The auction involved 19 rounds of bidding, starting at $900 million, with the minimum bid increase rising to $100 million after the second round.
  • The winning group includes Research In Motion, Apple Inc., Microsoft Corp., Sony Corp., Ericsson AB, and EMC Corp., which outweighed rival bids from Intel Corp. and Norpax LLC, a group led by RPX Corp.
  • The patent portfolio, covering over 6,000 patents and applications, includes wireless and internet technology innovations, and will significantly boost creditor recoveries for Nortel's unsecured U.S. creditors.
  • The auction began with Intel Corp. as the initial bidder, followed by Apple and Microsoft joining the Rockstar bid, while Intel dropped out after five rounds of bidding.

Statistics:

  • The winning bid of $4.5 billion is the largest in the history of patent auctions.
  • The patent portfolio acquired consists of over 6,000 patents and applications related to wireless and internet technology innovations.
  • The first round of bidding saw three companies and two groups competing, with Apple, Google, Intel, the initial Rockstar group, and Norpax LLC participating.
  • The minimum increase in bids rose to $100 million after the second round of bidding.
  • The auction spanned four days, from June 27 to June 30, 2011.

Sources:

  • Bloomberg News
  • Toronto Superior Court Judge Geoffrey Morawetz
  • Waterloo Region Record, 2011 All rights reserved.