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?Microsoft is paying just over US$1 billion to buy some 800 patents and applications from AOL and is also gaining access to the remaining 300 patents that AOL will be keeping.
AOL also received a license to the patents being sold to Microsoft.
The patent sale includes the sale of the stock of an AOL subsidiary upon which AOL expects to record a capital loss for tax purposes and as a result, cash taxes in connection with the sale should be immaterial. Additionally, AOL expects to utilize approximately $40 million of its existing deferred tax assets, representing approximately 20 percent of its total deferred tax assets, to offset any ordinary income taxes resulting from the license of its remaining patent portfolio.
AOL intends to return a significant portion of the sale proceeds to its shareholders.
"The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio," said Tim Armstrong, AOL's Chairman and CEO. "We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value."
The transaction is expected to be completed by the end of 2012, upon the satisfaction of customary conditions and regulatory approvals.
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Tags: [microsoft]? [aol]? [patents]? [USA]?
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