BlackBerry Limited has entered into an agreement to sell its non-core patents and patent applications to Malikie Innovations Limited, a subsidiary of Key Patent Innovations Limited (KPI), for a potential total of $900M. The deal excludes 120 monetizable non-core patent families and existing revenue generating agreements, with BlackBerry set to sell 32,000 patents and applications to Malikie.
There are no funding restrictions on the deal, with a reputable US-based investment business with over $30 billion in assets under management providing funding. As per the agreement, BlackBerry will receive $170M in cash at closing and an additional $30M in cash no later than the third anniversary of the transaction. The company will also be eligible for annual cash royalties calculated based on BlackBerry patent profits, with an initial cap of $700M and yearly cap increases of 4%.
BlackBerry’s Executive Chairman and CEO, John Chen, believes that the transaction will enable increased focus on the company’s core IoT and Cybersecurity opportunities, while strengthening the balance sheet and simplifying the business.
The company terminated its agreement with Catapult, as it was unable to secure financing. Looking at the stock action, shares rose over 6% in Tuesday’s premarket session. BlackBerry’s shares have declined by approximately 50% over the past year.
BlackBerry has sold its non-core patents and patent applications to Key Patent Innovations’ subsidiary, Malikie Innovations, for up to $900 million, including cash at closing and potential future royalties. The sale comprises about 32,000 patents and applications primarily related to mobile devices, messaging, and wireless networking, excluding monetizable non-core patent families related to mobile devices, existing revenue-generating agreements, and patents that support BlackBerry’s core business operations. The agreement is subject to the satisfaction of all regulatory conditions. BlackBerry will receive a license back to the patents being sold, and the sale will not affect customers’ use of any BlackBerry products, solutions, or services.
BlackBerry Announces New Patent Sale Transaction with Leading Patent Monetization Company for Up to $900 Million
Executes Agreement with Key Patent Innovations; Terminates Agreement with Catapult
WATERLOO, ON, March 21, 2023 /PRNewswire/ — BlackBerry Limited (NYSE: BB; TSX: BB) announced today that it has entered into an agreement to sell substantially all of its non-core patents and patent applications to Malikie Innovations Limited (“Malikie”), a newly-formed subsidiary of Key Patent Innovations Limited (“KPI”), a leading intellectual property monetization company, for a combination of cash at closing and potential future royalties in the aggregate amount of up to $900 million.
The transaction is not subject to any financing conditions. Funding has been secured from a leading US-based investment firm, with in excess of $30 billion of assets under management.
“We’re extremely pleased to have executed this agreement with KPI, whose industry-leading expertise and experience positions them well to realize the patent portfolio’s potential and enhance returns for BlackBerry,” said John Chen, Executive Chairman & CEO, BlackBerry. “This transaction, once complete, will further strengthen our balance sheet while simplifying our business and enabling increased focus on our core IoT and Cybersecurity opportunities.”
“We are very excited to have completed this transaction with a partner of BlackBerry’s calibre, and we look forward to getting to work to maximize returns from this portfolio,” said Angela Quinlan, Managing Director, KPI.
Under the terms of the agreement, BlackBerry will receive $170 million in cash on closing and an additional $30 million in cash by no later than the third anniversary of closing. BlackBerry will also be entitled to receive annual cash royalties from the profits generated from the BlackBerry patents, on the following basis:
- 8% of the first $500 million of profits;
- 15% of the next $250 million of profits;
- 30% of the next $250 million of profits; and
- 50% of all subsequent profits.
Royalty payments to BlackBerry will initially be capped at $700 million, subject to an annual cap increase of an amount equal to 4% of the remaining portion of the $700 million that has not been paid to BlackBerry as of the date of the increase. Malikie’s costs will also be capped in the calculation of profits generated.
Approximately 32,000 patents and applications relating primarily to mobile devices, messaging and wireless networking will be sold in the transaction with Malikie. The transaction excludes patents and applications that are necessary to support BlackBerry’s current core business operations. It also excludes approximately 120 monetizable non-core patent families relating to mobile devices (representing approximately 2,000 patents and applications which are primarily standards essential), as well as all existing revenue generating agreements. BlackBerry will receive a license back to the patents being sold and the transaction will not impact customers’ use of any of BlackBerry’s products, solutions or services.
Completion of the transaction is conditional upon, among other things, satisfaction of all regulatory conditions under the Hart–Scott–Rodino Antitrust Improvements Act in the United States and the Investment Canada Act.
Termination of Agreement with Catapult:
On December 20, 2022, BlackBerry provided an update on its previously-announced patent portfolio sale transaction with Catapult IP Innovations, Inc., indicating that Catapult was working with a financing partner and that the parties were negotiating definitive closing documents. BlackBerry also disclosed that it was then in advanced term sheet discussions with another party that was fully financed, and which had completed its due diligence on the portfolio.
Catapult was unable to secure financing that would have enabled it to complete the previously-announced transaction on amended terms that were acceptable to BlackBerry, and therefore BlackBerry has terminated its agreement with Catapult and has instead entered into the patent sale agreement with Malikie.
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