UPDATE 2-Mosaid in talks with private equity firm, stock up

Wed Oct 12, 2011 2:06pm EDT

* Mosaid floats possibility of "white knight" bid

* Patent company has rejected Wi-Lan's C$480 mln offer

* Private equity firm has expressed interest, Mosaid says

* Mosaid describes it as "meaningfully stronger"

* Mosaid shares rise 5.7 pct

By Pav Jordan

TORONTO, Oct 12 (Reuters) - Mosaid Technologies , which is fending off a hostile C$480 million ($475 million) takeover bid from fellow Canadian patent company Wi-Lan Inc , said on Wednesday it has received a "meaningfully stronger" expression of interest from a private equity firm.

Mosaid shares rose 5.67 percent at C$40.80 early on Wednesday afternoon, more than 7 percent higher than Wi-Lan's C$38- a-share takeover offer.

"Mosaid has received a formal, nonbinding indication of interest for a potential transaction," company lawyers said. "The potential bidder is a substantial private equity firm with an international presence and over $5 billion in capital under management."

Mosaid's lawyers made the statements to a panel of the Ontario Securities Commission in Toronto, where they were arguing to keep a shareholder rights plan, or poison pill, in place while they seek alternatives to the Wi-Lan offer, which expires on Friday.

Wi-Lan, which made its all cash offer on Aug. 17 after several attempts at a friendly deal, wants the OSC to remove the poison pill defense, arguing that Mosaid has had more than enough time to raise a new bid.

Mosaid would not identify the private equity firm it is in talks with on Wednesday, saying only that it has "noted success investing in Canadian public companies in competitive situations".

It said it is also in talks with other parties, all at different stages of due diligence and financing.

For its part, Wi-Lan argued before the OSC judge on Wednesday that the Mosaid poison pill should be struck because there was no deadline for interested parties to make a formal offer, and because there was no assurance a financial transaction would result.

Wi-Lan wants to buy Mosaid to help boost its patent arsenal and make it easier to extract lucrative licensing deals from technology giants in areas ranging from wireless to semiconductors.

Both companies make money by developing and licensing intellectual property for the communications and consumer electronics markets, where tech majors pay increasingly huge sums for patents to use as weapons in litigation and cross-licensing.

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