World-Class R&D Team Will Launch InterDigital into Global Leadership Role in Advanced Video Technology
WILMINGTON, Del., Feb. 11, 2019 (GLOBE NEWSWIRE) — InterDigital, Inc. (NASDAQ: IDCC), a mobile technology research and development company, today announced that it has made a binding offer to acquire the award-winning Research & Innovation (R&I) unit of Technicolor SA (Euronext Paris: TCH) (OTCQX: TCLRY), a worldwide technology leader in the media and entertainment sector. Upon completion of the transaction, InterDigital would become an unquestioned leader in both wireless and video research, with R&D-backed portfolios addressing the mobile, consumer electronics, IoT, and other markets.
In order to accommodate French labor law, InterDigital has made an irrevocable offer to Technicolor and certain of its subsidiaries to purchase Technicolor’s R&I unit. After completing the required prior consultation with Technicolor’s works council, the companies expect to execute a definitive acquisition agreement, the terms of which have been negotiated. The transaction is expected to close in mid-2019, subject to customary closing conditions.
As consideration for the acquisition, the parties have agreed to terminate the jointly-funded R&D collaboration that was entered into as part of InterDigital’s acquisition of Technicolor’s licensing business. In addition, Technicolor has agreed to reduce its rights to a revenue-sharing arrangement announced as part of InterDigital’s acquisition of Technicolor’s licensing business. There is no cash consideration.
With engineering teams in Rennes, France, and Palo Alto, California who will transfer to InterDigital, R&I is a premier research lab that conducts fundamental research into video coding, IoT / smart home, imaging sciences, AR and VR and artificial intelligence / machine learning. The unit was the driving force behind the patent portfolio acquired by InterDigital from Technicolor in July 2018. Technicolor’s R&I team includes leaders in fundamental standards like HEVC, ATSC 3.0 and other video coding technologies. Like InterDigital Labs, R&I also enjoys partnerships and collaboration with world-class universities and researchers around the world.
“Acquiring R&I is a decisive step in the creation of InterDigital’s video R&D and licensing business, which began with the acquisition of Technicolor’s licensing business last year. With this transaction, InterDigital creates an extraordinarily powerful research engine that will deliver fundamental innovation into two major markets: the wireless market, our longtime leadership area, and the video, display and consumer electronics market, a market with roughly the same revenue potential as the wireless market and which is a greenfield opportunity for us. Equally important, this transaction does not affect our commitment to diligent cost control and high operating leverage,” said William J. Merritt, President and CEO of InterDigital.
As part of the transaction, InterDigital will deliver R&D services to Technicolor. The agreement would support Technicolor’s continued leadership in immersive technology.
- The transaction will result in a modest increase in operating expenses after taking into account R&D tax credits from the French government and the elimination of InterDigital’s $5 million annual payment obligation to Technicolor to partially fund research. This obligation originated in connection with InterDigital’s July 2018 acquisition of Technicolor’s licensing business.
- A portion of the operating expenses will be paid through research contracts with Technicolor’s business units.
- InterDigital remains committed to restoring recurring costs, net of the proceeds from the above-noted research contracts, to 2017 levels.
- Unrelated to this latest transaction, InterDigital noted that it expects its fourth quarter 2018 operating expenses to be at the top end of the range communicated at our Investor Day held on December 10, 2018. We expect our fourth quarter 2018 operating expenses will include approximately $9 million related to one-time charges, including $4 million of non-cash charges related to the July 2018 acquisition of Technicolor’s licensing business.
InterDigital develops mobile technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry’s most critical and complex technical challenges, inventing solutions for more efficient broadband networks and a richer multimedia experience years ahead of market deployment. InterDigital has licenses and strategic relationships with many of the world’s leading wireless companies. Founded in 1972, InterDigital is listed on NASDAQ and is included in the S&P MidCap 400® index.
InterDigital is a registered trademark of InterDigital, Inc.
For more information, visit: www.interdigital.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our current beliefs, plans and expectations, including, without limitation, (i) our plans to acquire Technicolor’s R&I unit; (ii) our expectation that we will execute a definitive acquisition agreement; (iii) our expectation that the transaction will close in mid-2019; (iv) our belief that the acquisition will result in InterDigital becoming an unquestioned leader in both wireless and video research; (v) our belief in the revenue potential of the consumer electronics market; (vi) our timeline for meeting our recurring cost goals; (vii) our expectations about our fourth quarter 2018 operating expenses; and (viii) our expectation that the net impact of the transaction on our operating expenses will be modest after taking into account R&D tax credits from the French government. Words such as “will,” “would become,” “expect” and variations of any such words or similar expressions are intended to identify such forward-looking statements.
Forward-looking statements are subject to risks and uncertainties. Actual outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including, without limitation, those identified in this press release, as well as the following: (i) regulatory or other limitations on the ability of the parties to consummate the transaction; (ii) our ability to leverage the acquisition to become a leader in both wireless and video research; (iii) unexpected delays or difficulties related to InterDigital’s R&D efforts; (iv) InterDigital’s ability to generate revenue through our new licensing efforts in the consumer electronics field; (v) Technicolor’s credit-worthiness; (vi) the continued availability of research tax credits from the French government; and (vii) the finalization of accounting and valuation analyses related to the transaction.
InterDigital undertakes no duty to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.
Patrick Van de Wille
+1 (858) 210-4814
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