Technicolor sells its patent licensing business to InterDigital

(Reuters) - French media and entertainment company Technicolor TCH.PA said on Thursday it has agreed to sell its patent licensing business to U.S. wireless technology provider InterDigital IDCC.O in a deal valuing the unit at $475 million.

Technicolor, which makes video devices, modems, routers and other products, put the business up for sale in December as it sought to concentrate on its operating business after issuing four profit warnings last year when it was hit by rising memory chip prices.

The sale includes an upfront payment of $150 million, and Technicolor will also receive 42.5 percent of all future cash receipts from InterDigital’s new licensing activities in consumer electronics beyond operating expenses, Technicolor said.

“This agreement will allow us to fully focus on our core operating businesses and includes a collaborative research program built up on the strength of our research and innovation teams,” Technicolor’s Chief Executive, Frederic Rose, said in a statement.

“The agreement includes the sale of substantially all of Technicolor’s patent portfolio, excluding some mobile patents, a small number of patents for nascent technologies and some patents associated with patent pools,” Technicolor said.

"The agreement also covers Technicolor’s interest in the joint-licensing program with Sony 6758.T in the fields of digital TVs and computer display monitors, as well as certain royalty-bearing contracts."

Technicolor said last week that it expected memory chip prices to rise this year and weigh on its performance, after reporting 2017 results below already lowered expectations.

On the sale of its patent licensing business, Technicolor said it would record a capital gain broadly equivalent to the transaction’s value in its consolidated accounts when the sale closes, which is expected in mid-2018.

(This story corrects deal value and sourcing, paragraphs 1 and 3)

Reporting by Piotr Lipinski in Gdynia; Editing by Susan Fenton