|[April 09, 2012]
AOL and Microsoft Announce $1.056 Billion Patent Deal
NEW YORK --(Business Wire)--
AOL (News - Alert) Inc. (NYSE: AOL) (the "Company") today announced that the Company
has entered into a definitive agreement to sell over 800 of its patents
and their related patent applications to Microsoft (News - Alert) Corporation (NASDAQ:
MSFT) ("Microsoft") and to grant Microsoft a non-exclusive license to
its retained patent portfolio for aggregate proceeds of $1.056 billion
Following the sale, AOL will continue to hold a significant patent
portfolio of over 300 patents and patent applications spanning core and
strategic technologies, including advertising, search, content
generation/management, social networking, mapping, multimedia/streaming,
and security among others. AOL also received a license to the patents
being sold to Microsoft.
The patent sale includes the sale of the stock of an AOL subsidiary upon
which AOL expects to record a capital loss for tax purposes and as a
result, cash taxes in connection with the sale should be immaterial.
Additionally, AOL expects to utilize approximately $40 million of its
existing deferred tax assets, representing approximately 20 percent of
its total deferred tax assets, to offset any ordinary income taxes
resulting from the license of its remaining patent portfolio.
AOL management and its Board of Directors intend to return a significant
portion of the sale proceeds to shareholders and will determine the most
efficient and effective method to do so prior to the closing of the
transaction. Pro forma for the sale and license, as of December 31,
2011, AOL would have had approximately $15 per share of cash on hand.
"The agreement with Microsoft represents the culmination of a robust
auction process for our patent portfolio," said Tim Armstrong, AOL's
Chairman and CEO. "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
stategy to create long-term shareholder value."
"This is a valuable portfolio that we have been following for years and
analyzing in detail for several months," said Brad Smith, General
Counsel and Executive Vice President, Legal and Corporate Affairs,
Microsoft. "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."
The transaction is expected to be completed by the end of 2012, upon the
satisfaction of customary conditions and regulatory approvals, including
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Evercore Partners and Goldman Sachs acted as financial advisors and
Wachtell, Lipton, Rosen & Katz and Finnegan, Henderson, Farabow, Garrett
& Dunner acted as legal counsel to AOL in connection with the
AOL Inc. (NYSE: AOL) is a brand company, committed to continuously
innovating, growing, and investing in brands and experiences that
inform, entertain, and connect the world. The home of a world-class
collection of premium brands, AOL creates original content that engages
audiences on a local and global scale. We help marketers connect with
these audiences through effective and engaging digital advertising
From time to time, we post information about AOL on our investor
relations website (http://ir.aol.com)
and our official corporate blog (http://blog.aol.com).
This press release contains "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include, but are not limited to, statements
regarding the anticipated benefits of the transaction, the expected
closing date and other statements identified by words such as "may,"
"will," "intend," "estimate," "should," "expect" or similar expressions.
These statements are based on the current expectations and beliefs of
AOL's management, and are subject to uncertainty and changes in
circumstances, including, but not limited to, the approval of the
transaction by antitrust authorities and the satisfaction of the other
closing conditions to the transaction as well as to factors that could
affect the manner, timing and amount of the return of any of the sale
proceeds to AOL shareholders including the need for AOL to retain cash
for its business or to satisfy liabilities, the tax treatment of the
return of proceeds. Any forward-looking information is not a guarantee
of future performance and actual results may vary materially from those
expressed or implied by the statements herein, due to changes in
economic, business, competitive, technological, strategic and/or
regulatory factors. More detailed information about these factors as
they relate to AOL may be found in the section entitled "Risk Factors"
in AOL's Annual Report on Form 10-K for the year ended December 31,
2011, filed with the U.S. Securities and Exchange Commission. AOL is
under no obligation to, and expressly disclaims any obligation to,
update or alter the forward-looking statements contained in this press
release, whether as a result of new information, future events or
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