Bloomberg News

Samsung Is Said to Study InterDigital Patents After Approach

August 03, 2011

(Updates share price in seventh paragraph.)

Aug. 3 (Bloomberg) -- Samsung Electronics Co., the world’s second-largest maker of mobile phones, is examining InterDigital Inc.’s patent portfolio after being approached to make a bid, according to two people familiar with the matter.

Samsung is looking at the patents along with Apple Inc., Google Inc. and other potential bidders, said the people, who asked not to be identified because the talks are private. InterDigital, which holds patents related to mobile technologies used to transfer information, said last month that it hired bankers as it considers a sale.

InterDigital’s engineers invented some of the technology for high-speed mobile phone networks now used by the world’s biggest handset makers. The King of Prussia, Pennsylvania-based company may fetch more than $5 billion, according to analysts at Algorithm Capital and Dougherty & Co. Eastman Kodak Co. and other companies also are selling their patent portfolios.

Should Suwon, South Korea-based Samsung pursue a bid, it would vie against Apple and Google to purchase all or part of a portfolio of about 8,800 patents on inventions used in devices ranging from the iPhone to Google’s Android-based handsets and Research In Motion Ltd.’s BlackBerry. Smartphone sales are forecast to almost double to 1.1 billion in 2015, according to Gartner Inc., based in Stamford, Connecticut.

‘Pretty Risky’

“InterDigital has a lot of key patents,” Lee Seung Woo, a Seoul-based analyst at Shinyoung Securities Co., said by telephone. “The fight between Apple and Samsung is getting serious, so if the assets go to Apple, it could be pretty risky for Samsung. To hedge the risk, Samsung could go ahead with bidding, although they may have to pay a big premium.”

Samsung is involved in patent lawsuits with Apple since the iPhone maker sued the South Korean company in April, saying the Galaxy devices “slavishly” copied its products.

InterDigital has gained 73 percent since July 18, the day before it disclosed plans to explore a sale. The stock rose $8.75 to $71.96 at 4 p.m. New York time in Nasdaq Stock Market trading. Samsung fell 2.2 percent to 833,000 won in Seoul trading today.

Apple and Google are weighing possible bids, a person familiar with the matter said last month.

Jack Indekeu, a spokesman for InterDigital, declined to comment. Adam Yates, a U.S.-based spokesman for Samsung, didn’t return a call seeking comment.

Smartphone Supremacy

During the second quarter, Apple and Samsung became the top two makers of smartphones. Their shipments trumped those of Nokia Oyj for the first time, research firm Strategy Analytics said last week. Apple’s iPhones accounted for 18.5 percent of global smartphone shipments, followed by Samsung’s 17.5 percent and Nokia’s 15.2 percent, according to the research firm.

Samsung ranks second behind Nokia in terms of overall mobile-phone shipments.

Evercore Partners Inc. and Barclays Capital will “explore and evaluate potential strategic alternatives” that may include a sale, InterDigital said last month.

Google, whose Android operating systems runs smartphones that compete against the iPhone, lost in a bid for Nortel’s $4.5 billion portfolio to a group that included Apple and Microsoft Corp. InterDigital’s patents in cellular technology are “deeper and stronger” than Nortel’s, InterDigital Chief Executive Officer William Merritt said in April.

--With assistance from Zachary Tracer in New York and Jun Yang in Seoul. Editors: Tom Giles, Young-Sam Cho.

To contact the reporter on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net.

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net.


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