AOL sells patents to Microsoft for $1.056 billion

Josh Peterson Tech Editor
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AOL announced a $1.056 billion patent sale to Microsoft on Monday.

In a statement the companies said AOL would sell 800 patents, continuing to hold what the companies called a “significant patent portfolio of over 300 patents and patent applications spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming, and security among others.”

A “significant portion of the sale proceeds” would be returned to the shareholders, said the companies. In addition to the monetary proceeds of the sale, AOL also received a license to the patents being sold.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said Tim Armstrong, AOL’s chairman and CEO.

News of the transaction sent AOL shares surging Monday morning, the Wall Street Journal reports.

“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,”  said Armtrong.

“AOL ran a competitive auction and by participating, Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio,” said Brad Smith, general counsel and executive vice president for legal and corporate affairs at Microsoft.

The purchase expands Microsoft’s Web presence, giving the company more weight in its campaign against Google.

The transaction is expected to be completed by the end of 2012.

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