You've Got Patents! Microsoft Pays $1B for Batch of AOL Patents

By Matt Egan Features FOXBusiness

Microsoft's Patent Purchase: Smart Move?

Robert Scoble,, on Microsoft's patent purchases from AOL today, and how it will impact the company's worth.

AOL (AOL) scored a $1.06 billion transaction on Monday to sell more than 800 coveted patents to Microsoft (MSFT) and give the tech giant non-exclusive license to other patents.

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New York-based AOL said it plans to return a significant chunk of the proceeds to shareholders.

Wall Street cheered the news, sending shares of AOL surging as much as 40%.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” AOL CEO Tim Armstrong said in a statement. “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.”

Microsoft beat out Facebook and Google (GOOG) in the auction, Reuters reported.

“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” said Brad Smith, Microsoft’s general counsel.

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The companies said they expect the deal to close by the end of 2012.

AOL said it will determine the “most efficient and effective” way to return a “significant portion” of the sale proceeds to shareholders.

In the wake of the transaction, analysts at Miller Tabak raised their price target on AOL to $30.

Shares of AOL soared 35.99% to $25.05 ahead of Monday’s open on the announcement. On the other hand, shares of Microsoft retreated 1.02% to $31.20 amid a 1.1% drop on the S&P 500 futures. 

AOL said even after the sale, it will still hold on to a significant patent portfolio, including more than 300 patents and patent applications.

The deal with Microsoft also includes AOL unloading shares of an unspecified subsidiary that the company expects to record a capital loss on.

Goldman Sachs (GS) and Evercore Partners (EVR) served as financial advisers to AOL on the deal.

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