WiLAN's $42-per-share hostile bid was trumped by four dollars per share in a competing offer from U.S. private equity firm Sterling Partners, announced late last week.
WiLAN reiterated Monday that it's not prepared to match Sterling's offer.
In a statement, WiLAN – which is a minority owner of MOSAID – said it will gain of $3.6 million from the sale of its MOSAID shares to Sterling, which will "defray" costs it incurred in launching its hostile takeover bid.
Furthermore, a company spokesperson said WiLAN will look for other ways to grow its patent portfolio, which could come through an acquisition of another company.
"We've been working on this for over two months, which is a long time as these things go, and decided that while the MOSAID acquisition would be a wonderful fit with WiLAN's business strategy, it's only a good fit at the right price," said spokesperson Kathryn Hughes in an interview with OBJ.
"We determined that the right price has come and gone, and we are ready to continue to build this company, and we will continue to execute on our strategy. This acquistion is just not part of the picture at this time."
While not wanting to speak for the MOSAID shareholders, as the bid is still open until 5 p.m. Tuesday, she noted that it was "disappointing that this didn't happen simply because of the synergies between the firms in terms of people and being able to build a Canadian IP licensing powerhouse."
She added, "If the Sterling deal does come to fruition, we will be the only publicly traded IP licensing firm in Canada (of our size). That's not a bad position to be in, particularly when you have over $200 million in the bank and are highly profitable ... we are not stopping, we are not standing still, and we are anticipating strong performance. There's really no stopping us."
Chief executive Jim Skippen had said earlier this month that the company did not intend to increase the bid, a sentiment echoed in the press release issued Monday afternoon.
Wi-LAN share values increased nearly 10 per cent on the Toronto Stock Exchange in the late afternoon Monday, up 67 cents to $7.55. MOSAID's declined slightly to $45.55, down 40 cents.
MOSAID said it would have no comment as the WiLAN bid is still open for consideration.
Analysts had said on Friday that WiLAN was unlikely to up its bid.
"Based on our analysis of WiLAN's capacity to pay, and the need to make the acquisition accretive, we believe the bid from Sterling Partners puts MOSAID well beyond WiLAN's reach," wrote Sameet Kanade, an analyst for Northern Securities, in a note to clients.
BMO Capital Markets noted on Friday that WiLAN would need at least $49 a share to be attractive to shareholders.
"We doubt WiLAN has the financial resources to do so in cash, though they could try and top the offer with stock, which would result in WiLAN shareholder dilution of around 10 per cent," wrote analyst Brian Piccioni in a research note.
When contacted by OBJ on Monday, Mr. Piccioni and Mr. Kanade both said they had nothing to add as their recommendations to clients, to tender the shares to Sterling, remains unchanged.
Monday's news indicates the near-end of a saga that began in August when WiLAN announced a $38-per-share hostile takeover bid for its crosstown rival.
"It is my belief that to succeed in today's market, bigger is better," stated Mr. Skippen.
"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."
After announcing days later that it would acquire 2,000 Nokia Oyj patents through a takeover of Core Wireless S.a.r.l., MOSAID's board subsequently rejected the acquisition proposal in early September, calling the takeover "opportunistic", and adopted a poison-pill plan.
The takeover talk sparked a war of words between the two firms; WiLAN subsequently extended its bid and argued to the Ontario Securities Commission that the poison-pill plan should not be allowed. The commission allowed an extension of the plan until Nov. 1.
Sterling Partners, a U.S. firm, first emerged anonymously in an affadavit to the commission given by a MOSAID adviser.
The company made its $46-per-share offer official last week, with the full endorsement of the MOSAID board of directors. Nokia and Microsoft also agreed to waive a change-of-control clause on the patent portfolio MOSAID acquired, allowing Sterling to gain control of the patents after a possible acquisiton.
If the WiLAN offer is not taken by shareholders, they will then get the chance to vote on the Sterling offer in December or January, MOSAID has said.
