MOSAID takeover nears completion

Elizabeth
Elizabeth Howell
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If all goes to plan, by Friday Ottawa's MOSAID Technologies Inc. (TSX:MSD) will be a subsidiary of Sterling Partners.

MOSAID chief executive John Lindgren. (Provided)

The Ottawa patent licensing company announced Thursday that the friendly $590-million takeover arrangement received approval from the Ontario Superior Court of Justice.

The firm still needs to meet unspecified conditions before the transaction closes. Once it does, MOSAID's shares will be pulled from the Toronto Stock Exchange.

MOSAID shareholders almost unanimously voted for the acquisition earlier this week. The transaction also met Competition Board approval, which typically evaluates out-of-country takeovers to evaluate the net benefit to Canadians.

Sterling will gain control of a company with approximately 50 employees, $116 million in cash and 5,000 patents. That portfolio includes 2,000 Core Wireless Licensing S.a.r.l. patents MOSAID acquired from Nokia Oyj in September while undergoing a review of strategic alternatives.

The U.S. private equity firm first made its offer to MOSAID in October when the Ottawa company was fending off a hostile takeover bid from local rival Wi-LAN Inc.

WiLAN's initial $38-per-share offer in August came just six months after its chief executive, Jim Skippen, told analysts MOSAID was not a target for potential takeovers.

"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," Mr. Skippen, a former MOSAID executive, stated at the time.

"While an ambitious goal, we have been very successful. Combining WiLAN and MOSAID is the next logical step."

MOSAID girded itself against the offer with a poison-pill defence and an aggressive media campaign, even as at least one analyst publicly said a counteroffer was unlikely.

However, a white knight did emerge in October.

When WiLAN challenged the shareholders' rights plan in front of the Ontario Securities Commission Oct. 12, MOSAID adviser Neil Selfe revealed a private equity firm – then kept anonymous – had made a non-binding offer that was "meaningfully superior" to that of WiLAN's.

The securities commission subsequently granted an extension to MOSAID's shareholder rights plan until Nov. 1. For its part, WiLAN increased its bid to $42 per share on Oct. 19 while maintaining the competing offer had nothing to do with the decision.

"That's it. That's a close. By Nov. 1, at $42, we're going to walk and look at other ways to play our cash," Mr. Skippen said in an OBJ interview that day.

Nine days later, Sterling revealed itself with a $46-per-share bid, with the full support of the MOSAID board of directors. The Ottawa-based firm will retain its executive team, including chief executive John Lindgren.

"(MOSAID) balances the often competing pressures of compensating developers of new technologies while ensuring the market has cost-effective access to their innovation," Sterling co-founder Chris Hoehn stated at the time.

"It is fundamentally important work, and Sterling Partners is committed to making the necessary investments to help MOSAID realize its full potential."

Organizations: Superior Court, Toronto Stock Exchange

Geographic location: Ottawa

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