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Google submits $900M stalking-horse bid for Nortel's patent portfolio and kick-starts an auction process expected to be held in June

Google Bids $900M for Nortel's Patents

Michelle Donegan
News Analysis
Michelle Donegan
4/4/2011
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Google (Nasdaq: GOOG) has emerged as the stalking-horse bidder for Nortel Networks Ltd. 's patent and patent application portfolio with a bid of $900 million in cash for these assets, the companies announced on Monday.

The news that Nortel has chosen Google's $900 million cash bid in a stalking-horse agreement starts the procedure for what will be the Canadian vendor's final asset auction.

Nortel said it will file the stalking-horse asset sale agreement with the U.S. Bankruptcy Court for the District of Delaware as well as a motion for an auction, which it expects to be held in June 2011. Google's $900 million bid is the offer that other companies would have to beat in the auction.

Nortel's patent portfolio includes about 6,000 patents and patent applications covering "wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios," according to a Nortel press release, which also claims that the portfolio "touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking."

Google, along with Apple Inc. (Nasdaq: AAPL), was reportedly eyeing the bankrupt Canadian vendor's patents at the end of last year. (See Rumor: Apple, Google Eye Nortel Patents .)

Kent Walker, Google's senior vice president and general counsel, wrote on the company's corporate blog today:

    Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories. ... So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the 'stalking-horse bid,' which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community-- which is integrally involved in projects like Android and Chrome -- continue to innovate.

Why this matters
Nortel's patent portfolio has been one of the most eagerly anticipated asset sales from the bankrupt vendor. As such, bidding in the upcoming auction in June is likely to be fierce. (See Nortel Patents Sale's Pending.)

Google's interest is clear: The Internet search giant needs to beef up its patent position, and Nortel's portfolio would give the company a boost here.

Other vendors that have been reported as prospective bidders for Nortel's patents include Apple, Huawei Technologies Co. Ltd. , Motorola Inc. (NYSE: MOT), BlackBerry and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), as well as Intellectual Ventures Management LLC , Interdigital and RPX Corp.

For more
Nortel's patent portfolio is the last major asset the vendor has to sell.



— Michelle Donegan, European Editor, Light Reading Mobile

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pdonegan67
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pdonegan67,
User Rank: Light Sabre
12/5/2012 | 5:08:45 PM
re: Google Bids $900M for Nortel's Patents


Since the company is so patent-poor in the cellular space, Google's need for these patents is greater than pretty much anyone else that might also be after them. And its resources are greater than pretty much anyone else that might be after them as well. Apart from Apple. I'd have thought these two must be favourites to secure these patents.


It will be interesting to know how China Mobile, Huawei and ZTE are going to play their hand, mind you. I'd have thought that many of the traditional European and U.S telecom equipment vendors will struggle to make a winning bid in their own right. Unless a subset of them somehow combine to put together a joint bid, of course.

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