* Says WiLan offer is opportunistic and inadequate
* Says largest shareholder and officers have rejected deal
* Does not say whether will seek other offers
(Adds reaction from WiLan, updates shares)
By Pav Jordan
TORONTO, Sept 7 Mosaid Technologies MSD.TO on
Wednesday asked shareholders to reject a hostile, C$480 million
takeover bid from WiLan Inc (WIN.TO) after the patent licensing
company's board said the offer was inadequate.
Ottawa-based Mosaid said it might pursue higher bids for
the company after investors digest its acquisition last week of
a huge portfolio of Nokia NOK1V.HE and Microsoft (MSFT.O)
"Even before Mosaid acquired the Core Wireless patents,
WiLan's offer was clearly inadequate and highly opportunistic -
it is only more so now," Mosaid Chairman Carl Schlachte said in
WiLan, which develops and licenses intellectual property
for the communications and consumer electronics markets, made a
C$38-a-share offer for Mosaid in late August. The bid
underscores the global race for technology patents to use as
weapons in litigation and in cross-licensing. [ID:nN1E77G1WU]
Mosaid shares slipped 1.46 percent to C$40.60 a share in
midafternoon trade in Toronto, but have been trading above
WiLan's C$38-a-share offer price, suggesting the market expects
a higher bid to emerge. WiLan rose 5.2 percent to C$7.28 a
Mosaid announced a deal last week to acquire about 2,000
Nokia NOK1V.HE and Microsoft (MSFT.O) wireless patents,
saying the deal would bring revenues exceeding all of the C$1
billion generated since the company's formation in 1975.
And while several analysts raised their fundamental
valuations of the company as a result, Mosaid's share price has
been largely unaffected.
In a 56-page circular, the company said it was waiting for
the broader market to assess the wireless patents acquisition
before deciding on a future course of action, including the
possibility of a merger, sale or restructuring.
Mosaid said its largest shareholder, Mawer Investment
Management Ltd, and all of its directors and officers - holding
some 16.7 percent of the company's stock - have rejected the
Mawer Investment portfolio manager Jeff Mo said the WiLan
offer only values Mosaid's existing business, without taking
into account the potential for future growth, especially after
the Nokia patent deal was announced.
He said all the other stock holders he had spoken to agree,
including many who feel Mosaid would do best to remain a
stand-alone company as it goes through the process of
"A large minority feel that a cash takeover at this stage
of Mosaid's development is not the best way to maximize value,"
Mosaid Chief Executive John Lindgren said the company aims
to convince shareholders and potential investors that the new
patent portfolio, while weighted more toward technology that
runs existing 3G networks, will remain relevant even with the
advent of more advanced 4G networks.
"Every 4G phone sold on the planet will be backward
compatible with 3G networks," he said. "The revenue potential
from this program are unlike anything else that we've put our
hands on," he told Reuters.
A WiLan spokesman said the company had no statement to make
at this time.
Bank of Montreal analyst Brian Piccioni said in a report
the patents added C$17 a share to his fundamental valuation of
Mosaid. He raised his price target on the stock to C$49 a share
"The largest shareholder opposes the bid, so that's a
start, as well as speaking to those large shareholders and
trying to say, 'listen, there's a lot more value here than what
you're getting at C$38 a share,'" Piccioni said by telephone.
Mosaid also said the WiLan offer values it below its peer
group, and said it was not a firm offer because it gave WiLan
the option not to proceed.
Wilan's offer expires on Sept. 28.
(Reporting by Pav Jordan; Editing by Frank McGurty)