InterDigital Makes Binding Offer to Acquire Technicolor’s Research & Innovation Unit
February 11 2019 - 1:29AM
InterDigital, Inc. (NASDAQ: IDCC), a mobile technology research and
development company, today announced that it has made a binding
offer to acquire the award-winning Research & Innovation
(R&I) unit of Technicolor SA (Euronext Paris: TCH) (OTCQX:
TCLRY), a worldwide technology leader in the media and
entertainment sector. Upon completion of the transaction,
InterDigital would become an unquestioned leader in both wireless
and video research, with R&D-backed portfolios addressing the
mobile, consumer electronics, IoT, and other markets.
In order to accommodate French labor law, InterDigital has made
an irrevocable offer to Technicolor and certain of its subsidiaries
to purchase Technicolor’s R&I unit. After completing the
required prior consultation with Technicolor’s works council, the
companies expect to execute a definitive acquisition agreement, the
terms of which have been negotiated. The transaction is expected to
close in mid-2019, subject to customary closing conditions.
As consideration for the acquisition, the parties have agreed to
terminate the jointly-funded R&D collaboration that was entered
into as part of InterDigital’s acquisition of Technicolor’s
licensing business. In addition, Technicolor has agreed to reduce
its rights to a revenue-sharing arrangement announced as part of
InterDigital’s acquisition of Technicolor’s licensing business.
There is no cash consideration.
With engineering teams in Rennes, France, and Palo Alto,
California who will transfer to InterDigital, R&I is a premier
research lab that conducts fundamental research into video coding,
IoT / smart home, imaging sciences, AR and VR and artificial
intelligence / machine learning. The unit was the driving force
behind the patent portfolio acquired by InterDigital from
Technicolor in July 2018. Technicolor’s R&I team includes
leaders in fundamental standards like HEVC, ATSC 3.0 and other
video coding technologies. Like InterDigital Labs, R&I also
enjoys partnerships and collaboration with world-class universities
and researchers around the world.
“Acquiring R&I is a decisive step in the creation of
InterDigital’s video R&D and licensing business, which began
with the acquisition of Technicolor’s licensing business last year.
With this transaction, InterDigital creates an extraordinarily
powerful research engine that will deliver fundamental innovation
into two major markets: the wireless market, our longtime
leadership area, and the video, display and consumer electronics
market, a market with roughly the same revenue potential as the
wireless market and which is a greenfield opportunity for us.
Equally important, this transaction does not affect our commitment
to diligent cost control and high operating leverage,” said William
J. Merritt, President and CEO of InterDigital.
As part of the transaction, InterDigital will deliver R&D
services to Technicolor. The agreement would support Technicolor’s
continued leadership in immersive technology.
Financial Guidance
- The transaction will result in a modest increase in operating
expenses after taking into account R&D tax credits from the
French government and the elimination of InterDigital’s $5 million
annual payment obligation to Technicolor to partially fund
research. This obligation originated in connection with
InterDigital’s July 2018 acquisition of Technicolor’s licensing
business.
- A portion of the operating expenses will be paid through
research contracts with Technicolor’s business units.
- InterDigital remains committed to restoring recurring costs,
net of the proceeds from the above-noted research contracts, to
2017 levels.
- Unrelated to this latest transaction, InterDigital noted that
it expects its fourth quarter 2018 operating expenses to be at the
top end of the range communicated at our Investor Day held on
December 10, 2018. We expect our fourth quarter 2018 operating
expenses will include approximately $9 million related to one-time
charges, including $4 million of non-cash charges related to the
July 2018 acquisition of Technicolor’s licensing business.
About InterDigital®
InterDigital develops mobile technologies that are at the core
of devices, networks, and services worldwide. We solve many of the
industry's most critical and complex technical challenges,
inventing solutions for more efficient broadband networks and a
richer multimedia experience years ahead of market deployment.
InterDigital has licenses and strategic relationships with many of
the world's leading wireless companies. Founded in 1972,
InterDigital is listed on NASDAQ and is included in the S&P
MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements include information regarding our
current beliefs, plans and expectations, including, without
limitation, (i) our plans to acquire Technicolor’s R&I unit;
(ii) our expectation that we will execute a definitive acquisition
agreement; (iii) our expectation that the transaction will close in
mid-2019; (iv) our belief that the acquisition will result in
InterDigital becoming an unquestioned leader in both wireless and
video research; (v) our belief in the revenue potential of the
consumer electronics market; (vi) our timeline for meeting our
recurring cost goals; (vii) our expectations about our fourth
quarter 2018 operating expenses; and (viii) our expectation that
the net impact of the transaction on our operating expenses will be
modest after taking into account R&D tax credits from the
French government. Words such as “will,” “would become,” “expect”
and variations of any such words or similar expressions are
intended to identify such forward-looking statements.
Forward-looking statements are subject to risks and
uncertainties. Actual outcomes could differ materially from those
expressed in or anticipated by such forward-looking statements due
to a variety of factors, including, without limitation, those
identified in this press release, as well as the following: (i)
regulatory or other limitations on the ability of the parties to
consummate the transaction; (ii) our ability to leverage the
acquisition to become a leader in both wireless and video research;
(iii) unexpected delays or difficulties related to InterDigital’s
R&D efforts; (iv) InterDigital’s ability to generate revenue
through our new licensing efforts in the consumer electronics
field; (v) Technicolor’s credit-worthiness; (vi) the continued
availability of research tax credits from the French government;
and (vii) the finalization of accounting and valuation analyses
related to the transaction.
InterDigital undertakes no duty to update publicly any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as may be required by applicable
law, regulation or other competent legal authority.
InterDigital
Contact:Patrick Van de WilleEmail:
patrick.vandewille@interdigital.com +1 (858) 210-4814 |
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