Blackberry announced today that it has entered into an agreement to sell all of its non-core patents and patent applications to Maliki Innovations Ltd. (“Maliki”), for a combination of cash at closing and potential future royalties, for an amount in the aggregate US $900 million.
Maliki’s newly formed subsidiary is Key Patent Innovation LimitedA Dublin, Ireland based patent monetization company.
The road to this sale has been a long one. in june Last year, BlackBerry announced that it was no longer under a previously announced exclusivity agreement to sell its non-core patents to Catapult IP Innovations. The company attributed the withdrawal to Catapult’s slow pace in raising the US$600 million needed to close the deal.
Then in December another communication from BlackBerry provided an update. Its transaction with Catapult, which indicated that Catapult was working with a financing partner, and the parties were negotiating definitive closing documents. however, Catapult was unable to obtain re-financing that would have been able to complete the transaction on terms acceptable to BlackBerry, and so BlackBerry terminated its agreement with Catapult and instead entered into a patent sales agreement with Maliki.
The transaction with Maliki is not subject to any financial conditions. Funding has been secured from a leading US-based investment firm with over US$30 billion in assets under management.
Under the agreement, BlackBerry will receive US$170 million in cash at closing, and an additional $30 million in cash by the third anniversary of closing. In addition, BlackBerry will also be entitled to receive annual cash royalties from the profits generated from the BlackBerry Patents on the following basis:
eight percent of the first US$500 million of profits; 15 percent of the next US$250 million in profits; 30 percent of the next US$250 million in profits; and 50 percent of all subsequent profits.
“We are extremely pleased to execute this agreement with KPI, whose industry-leading expertise and experience have enabled them to realize the potential of the patent portfolio and drive returns for BlackBerry,” said John Chen, Executive Chairman and Chief Executive Officer of BlackBerry. placed in a good position to expand.” “This transaction, once completed, will further strengthen our balance sheet while simplifying our business and enabling us to focus more on our core IoT and cybersecurity opportunities.”
Royalty payments to the Company will be capped at the first US$700 million, and are subject to annual cap increases of an amount equal to four percent of the remaining portion of the $700 million that has not been paid to BlackBerry as of the date. of growth. The owner’s costs will also be capped in the calculation of the profit generated.
Approximately 32,000 patents and applications, primarily related to mobile devices, messaging and wireless networking, will be sold in the transaction with Maliki.
The transaction excludes patents and applications that are necessary to support BlackBerry’s current core business operations. The company said in its announcement that BlackBerry would receive back a license for the patents being sold, and that the transaction would not affect customers’ use of any BlackBerry products, solutions or services.
Completion of today’s transaction is conditioned, among other things, on the satisfaction of all regulatory conditions under the Hart-Scott-Rodino Antitrust Improvements Act in the United States and the Investment Canada Act.
