Microsoft Pays $1.056 Billion for 800 AOL Patents

The agreement also includes patent cross-licensing

Today, AOL and Microsoft announced the signing of a definitive agreement for the acquisition of over 800 patents and their related patent applications from AOL, for aggregate proceeds of $1.056 billion in cash.

Additionally, as part of this agreement, Microsoft receives a non-exclusive license to AOL’s retained patent portfolio.

The duo also announced that AOL was granted a license to the portfolio being sold to Microsoft. Moreover, they unveiled that this sale also included the stock of an AOL subsidiary.

Although it sells an important part of its intellectual property, AOL will still hold an important portfolio of over 300 patents and patent applications.

The company announced that these span over technologies such as advertising, search, content generation / management, social networking, mapping, multimedia/streaming, security, and more.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” Tim Armstrong, AOL’s Chairman and CEO, stated.

“We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.”

The deal is expected to be completed before the end of 2012, and is subject to customary conditions and regulatory approvals, such as expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” Brad Smith, General Counsel and Executive Vice President, Legal and Corporate Affairs, Microsoft, commented on the deal.

“AOL ran a competitive auction and by participating, Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

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