The majority of BlackBerry Limited’s (NYSE:BB) non-core patents and patent applications are going to be sold to Malikie Innovations, which is a subsidiary of Key Patent Innovations Ltd., according to an announcement made by BlackBerry Limited. The final payment under the terms of the arrangement might reach $900 million in cash, in addition to potential future royalties.
The acquisition is essential for BlackBerry since it improves the firm’s balance sheet, makes its operations simpler, and enables the company to concentrate on its core Internet of Things (IoT) and cybersecurity businesses.
The patent sale agreement will cover more than 32,000 patents and applications relating to mobile devices, messaging, and wireless networking. These topics are all covered by the patents. Nevertheless, it does not contain any patents or applications that are necessary to continue the company’s current core business operations, nor does it include any agreements that are now earning revenue on an ongoing basis.
The terms of the agreement include that BlackBerry will receive $170 million in cash at the completion of the transaction, in addition to an additional $30 million in cash on the third anniversary of the completion of the transaction. In addition, BlackBerry will receive cash royalties on an annual basis as a portion of the revenue generated by the sale of patents.
The initial royalty payments that will be made to BlackBerry will be set at $700 million, with a yearly cap hike of around 4% of the remaining $700 million that will be paid.
The deal is contingent on the fulfillment of all regulatory criteria imposed by the Investment Canada Act in Canada and the Hart-Scott-Rodino Antitrust Improvements Act in the United States.
In addition, BlackBerry ditched its agreement to sell its intellectual property to Catapult IP Innovations, which had been in the works for some time. After that, the company announced that it had finished doing its due diligence on the patent portfolio and was in the process of advanced term sheet talks with another party that was fully financed.
The proposed sale was ultimately unsuccessful because Catapult was unable to secure the necessary funding to complete the purchase on conditions that were acceptable to BlackBerry.
In general, the patent sale agreement that BlackBerry reached with Malikie is a step in the right direction because it will enable the company to concentrate on its core businesses while making a considerable amount of cash through royalties.
Businesses and governments all across the world can take use of the advanced security software and services offered by Blackberry. It does this by providing platforms, including hardware and software, for managing security, mobility, and communication between different types of hardware, as well as between different types of programmes and mobile applications, and the Internet of Things.
BlackBerry projects that it will earn a total of $656 million in revenue during its fiscal year 2023, which will include revenues from IoT of approximately $206 million and revenues from cybersecurity of $418 million.
However, it is anticipated that sales from the cybersecurity division would be lower than the prediction that was published during the preceding quarter. This is due to the fact that certain large government projects have been delayed until the fiscal year 2024.
The price of BlackBerry stock has decreased by 50.1% over the past year, but the reduction in the value of the sub-industry was only 6.7%.
Featured Image: Unsplash @ Thai Nguyen
Author Stephanie Bédard-Châteauneuf 
