Sameet Kanade of Northern Securities said the $480-million hostile takeover bid, announced after markets closed Wednesday, would create a "patent powerhouse" in the nation's capital if approved by MOSAID shareholders.
"(It would create a) more sustainable revenue stream in the long-term, which enables the acquisition and creation of more patents," said Mr. Kanade.
"It definitely creates a better business model, but the valuation needs to be right ... (the offer) adequately values only the signed contract, but does not adequately value the contracts in the pipeline."
The all-cash offer represents a 20-per-cent premium over MOSAID's closing share price of $31.65.
"It is my belief that to succeed in today's market, bigger is better," said WiLAN CEO Jim Skippen in a statement.
"Since joining WiLAN my vision has been to increase the company's scale with a deeper, larger patent portfolio to make it more compelling for potential licensees to choose a license over litigation. While an ambitious goal, we have been very successful. Combining WiLAN and MOSAID is the next logical step."
The acquisition would give WiLAN a portfolio of 4,200 wireless, wireline, consumer electronics and semiconductor patents.
WiLAN had $204.5 million in cash at the end of June, and said it has an agreement with Canaccord Genuity Corp. and CIBC World Markets Inc. to raise $200 million in debt financing.
Mr. Skippen is no stranger to MOSAID, having worked at the intellectual property firm as a senior executive for approximately a decade. WiLAN said the two Ottawa-based companies have "similar cultures," lessening any potential integration pitfalls should the transaction be approved.
In a conference call with analysts in February, Mr. Skippen said WiLAN was looking for acquisition targets but denied MOSAID was a target.
However, Ottawa's most valuable public tech company said Wednesday that it attempted to enter acquisition talks with MOSAID on several occasions in recent years before making its unsolicited offer directly to shareholders this week. Northern Securities' Mr. Kanade said MOSAID has long been considered an acquisition target.
While this takeover bid may have been in the works for some time, the importance of intellectual property has recently been thrust into the spotlight following the US$4.5-billion sale of Nortel's patent portfolio in July, which attracted the attention of such big names as Google, Research In Motion and Apple.
Analysts have also pointed out that patents were likely a major factor in Google's $12.5-billion acquisition of Motorola Mobility.
Both WiLAN and MOSAID have extensive wireless patents and make money by licensing the intellectual property, sometimes under the threat of litigation.
In recent years, WiLAN has taken on industry heavyweights such as LG Electronics, Apple, Sony and Toshiba.
WiLAN reported second-quarter revenues of US$27.6 million - the highest in the company's history - earlier this month, double that of a year earlier. However, it held its full-year revenue guidance steady at $110 million to $115 million. The company's shares hit a 52-week high in July before falling in tandem with major indices during this month's market turmoil.
MOSAID said its full-year revenues were up 13 per cent to $80.5 million when it reported its fiscal year-end results in June. The company is scheduled to release its first-quarter results next week.
If WiLAN is successful in its takeover bid, the company said it intends to increase its quarterly dividend payments, which currently sit at $0.025 per share.