InterDigital suitors in holding pattern, sources say
Possible suitors for InterDigital (NASDAQ:IDCC) are either waiting for a lower valuation or are unwilling to part with the cash needed to complete a deal, said sources following the situation.
Domestic suitors of InterDigital say that the market capitalization of the company needs to fall more for acquirers to be interested, said the first source familiar with the process.
Asian interest has dropped off because some buyers are not seeking to complete a large transaction, noted a person familiar with the matter, a second source familiar and an industry banker. An InterDigital spokesperson did not return a request for comment.
Today, 26 October, InterDigital will report 3Q11 results but announced earlier this week that it will suspend its conference call due to its continuing strategic review. On 19 July, InterDigital announced it hired Evercore and Barclays to review strategic alternatives for the King of Prussia, Pennsylvania-based IP company.
The first source said the valuation of the whole company will likely have to drop below USD 2bn before the a deal becomes reasonable for domestic suitors. This source added it was his impression that the process has quieted down as suitors wait for a "pull back" in price.
This news service reported earlier this month that larger US technology companies may be more open to playing a minority role in a transaction if the price was right.
InterDigital's shares are trading around USD 47.85, with a market capitalization of USD 2.2bn. InterDigital finished the 30 June quarter with net cash of USD 512m.
The person, who was familiar with Samsung (SEO:005930), said the Korean company has been following the process with interest to evaluate whether a transaction could have a competitive impact on the industry but the company is not working to take "any action" on the asset.
Likewise, the second source, who was familiar with HTC (TPE:2498), said that the Taiwan company's interest in InterDigital at this point in time is low. This source noted that recent deals, including Nortel, have been at near-inflated valuations and HTC does not hope to participate in a deal at such valuations.
HTC has never paid USD 2bn for a patent pool, the source said, adding that "not too long ago [HTC was] just a small company."
The industry banker following the process said the excitement surrounding companies' need to own IP assets has come down. InterDigital was not able to get a bidding war going for its assets and buyers do not feel compelled to rush into a transaction, he said.
For 2010, InterDigital had total revenue of USD 394.5m, with patent license royalties equaling USD 370m of the total. At the current valuation, the company is selling for about 4x enterprise value to 2010 sales.
boomandgloom, Going forward you may want to state your source in your posts when coping and pasting, especially when it is not confirmed by any others. I think you owe it to this message board to go back and contact the source you copied the article from to try and verify its authenticity.
I added that in the next post directly after the quote saying 'posted at Ihub'
Someone there posted the link.
I have posted on another thread that I have some doubts as to the authenticity as the stock action was simply too unusual
300 k in 1 minute or so and then a float back up?
I just found that odd.
I did not mean to take credit or give legitimacy to the article.
Also the time you took post from. I found this piece posted at 2:09 PM and on thinkorswim a one liner came out at 13:45 PM Hearing Interdigital not receiving as much interest as thought -dealreporter. Let me also tell you that the stock was already at it's $44 low when this hit the wire on 13:45. This is all very shady. I think it says something that the stock still closed at $45. You can't trust any of it.
"The industry banker following the process said the excitement surrounding companies' need to own IP assets has come down. InterDigital was not able to get a bidding war going for its assets and buyers do not feel compelled to rush into a transaction, he said."
Anyone else here think they could be referencing our own "beloved" Lind? We know this guy likes to pass himself off as an "industry banker" ... while we all know he is actually an H&R guy. Considering the way DR operates (incomplete, if not inaccurate, and misleading statements), I wouldn't be surprised if he snowed these guys into believing his delusions. Or, could he possibly even be a shill for them??? Hmmmmmmm ...
dc1081, Is that right. You don't know who the sources of the leaks are from. Its only a dumb money guess.
The bidding war? Do you really think there still is an ongoing auction? The only thing you can hope for is IDCC has blow out earnings and maybe a suitor has second thoughts................ but wait a minute, this information would have been very evident during the confidential due diligence conducted by suitors prior to bids. hmmmmmmmmmmmm, now what?
This dealreporter full text is the most detail made available to the general public (dumb money) since this whole auction process started. Analyze it, parse it, put your spin on it, slice it, dice it, message it, look for the positives, look for the negatives, do what ever you wish to do with it but the reality of a sale is pretty evident. If your holdings are under water than you are in denial. at some point you will need to face reality and move on.
If you get a pop with earnings consider it a gift and take advantage of it. How many times will the gift horse visit you?
This is just a rehash of the low interest by Asian bidders #$%$ that sparked the 14 point decline on September 26th.Getting the same quotes from the same unnamed sources at Samsung and HTC. Give me a break! How much water is DR carrying, not only for the Asian tight-wads, but also for their Hedge Fund subscribers. When they get an on the record quote from someone at Apple, Intel, or Qualcomm, I'll be ready to listen, and not before.Hey, fool me once, but fool me with the same basic story three or four more times! How gullible do these guys think we are?
The "chicken littles" are in mass concert today. One might sat it is orchestrated. The question is to what end purpose do they serve? Shorts? Maybe buyers looking to get in on the cheap? The clock is still ticking.
It scares me because I cannot believe that DR would do the same gaff twice. That would be too irresponsible and risky vis a vis authorities.
Also there is a lot more detail here.
( I never believed HTC was ever a solo buyer etc)