InterDigital Inc said on Monday it had agreed to sell to Intel Corp about 1,700 wireless technology patents for $375 million, sending InterDigital shares up 27%.
The agreement involves patents primarily related to 3G , LTE and 802.11 technologies.
While Intel (Mountain View, Calif., USA) is pushing to expand its chip business beyond computers and into mobile devices, InterDigital (King of Prussia, Penn., USA) for about a year has been seeking to capitalize on a surge in interest in wireless patents.
InterDigital investors applauded the deal on Monday after some had questioned the company's ability to finalize a patent sale after the company said in January that it had failed to find a buyer for the whole company but would keep looking for buyers for its patent portfolio.
In July 2011, InterDigital said it was looking into a possible sale of the company or its patents in the hope that other big patent deals would boost its value.
"This should reduce some of the executional overhang that was on the stock. The market was worried they wouldn't meet this milestone," said M Partners analyst Ron Shuttleworth. "They lost a lot of credibility once they had to cancel the process."
However, Bernstein analyst Stacy Rasgon said that the $220,000 price per patent that Intel agreed to pay appeared to be much lower than previously announced patent deals.
In comparison, Rasgon cited Nortel's (Ontario, Canada) $4.5 billion patent sale last year that fetched $750,000 per patent and Google Inc's (Mountain View, Calif., USA) recent $12.5 billion purchase of Motorola Mobility, which implies a price of more than $735,000 per patent assuming a zero valuation for its cellphone hardware business.
Rasgon said that the deal should fit well with Intel's mobile strategy.
"While we believe these new patents acquired from Interdigital should further bolster their position, we do not expect any changes to their wireless strategy as a result of the purchase," Rasgon said in a research note.
InterDigital also announced on Monday that its board had authorized a doubling of its share buyback authorization to $200 million from $100 million. It also said it was sticking by its revenue target of $71 million for the second quarter, including the sale of other patents for $9 million in a separate deal.
The companies expect the deal to close in the third quarter.
Evercore Partners acted as InterDigital financial adviser and Wilson Sonsini Goodrich 7 Rosati acted as legal counsel.
InterDigital shares were up $6.36 to $29.24 in afternoon trade on Nasdaq. Intel shares, also on Nasdaq, rose 16 cents to $27.50.