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Technicolor has received a binding offer and entered into exclusive negotiations with InterDigital a mobile technology research and development company, for the sale of its Research & Innovation activity. InterDigital acquired Technicolor's Patent Licensing business in 2018.
"This proposed transaction continues the simplification of the Group's structure while ensuring that its R&I teams join a world class technological organization. As a result, Technicolor will henceforth be able to focus its resources solely on its operating businesses", said Frederic Rose, Chief Executive Officer of Technicolor.
The transaction would be structured as an asset purchase with a concurrent R&I cooperation agreement specifically:
With InterDigital's acquisition of Technicolor's R&I activity, Technicolor will materially reduce its costs (c. (€21) million of Adjusted EBITDA on 2017 cost basis) starting in 2020, representing a payback of less than 12 months;
Technicolor's right to receive 42,5% (beyond operating expenses) of the future royalties from InterDigital's licensing activities in the Consumer Electronics field would also be amended. As a result of various adjustments, Technicolor's future cash receipts would be reduced by 50% compared to the previous net present value estimation.
R&I was presented in Corporate and Other segment but will now be classified in the Discontinued operations together with the Patent Licensing business. Corporate and Other segment includes Trademark Licensing activities and Corporate activities.
This makes it seem more like cost shedding than an asset sale, as it reduces the recurring income from the previous sale of the licensing business to InteDigital by 50%.
"This proposed transaction continues the simplification of the Group's structure while ensuring that its R&I teams join a world class technological organization. As a result, Technicolor will henceforth be able to focus its resources solely on its operating businesses", said Frederic Rose, Chief Executive Officer of Technicolor.
The transaction would be structured as an asset purchase with a concurrent R&I cooperation agreement specifically:
With InterDigital's acquisition of Technicolor's R&I activity, Technicolor will materially reduce its costs (c. (€21) million of Adjusted EBITDA on 2017 cost basis) starting in 2020, representing a payback of less than 12 months;
Technicolor's right to receive 42,5% (beyond operating expenses) of the future royalties from InterDigital's licensing activities in the Consumer Electronics field would also be amended. As a result of various adjustments, Technicolor's future cash receipts would be reduced by 50% compared to the previous net present value estimation.
R&I was presented in Corporate and Other segment but will now be classified in the Discontinued operations together with the Patent Licensing business. Corporate and Other segment includes Trademark Licensing activities and Corporate activities.
This makes it seem more like cost shedding than an asset sale, as it reduces the recurring income from the previous sale of the licensing business to InteDigital by 50%.