Starboard To AOL: Patent Sale Not Enough

Posted on Apr 11 2012 - 10:12am by Editorial Staff

America Online (AOL) which recently announced that the company has entered into a definitive agreement to sell over 800, keeping over 300 significant patent portfolios to itself, of its patents and their related patent applications to Microsoft granting the software giant a non-exclusive license to its retained patent portfolio for aggregate proceeds of $1.056 billion in cash.

Activist fund Starboard Value LP which recently raised its stake in America Online to 5.1%, in February nominated a slate of five candidates to AOL board, saying the prior discussions with the company in the past two months were not up to the mark. AOL in a statement states that it held several meetings with Starboard to address its questions and offered the hedge fund an opportunity to help shape the company’s board.

Starboard letter to the AOL board released on Tuesday, Starboard said that while it was pleased with the patent sale, it did not address “serious concerns” with the “poor operating performance” at AOL. Starboard said AOL should return all the proceeds to its shareholders. “We remain concerned that shareholder capital will continue to be used for poorly conceived acquisitions and investments into money-losing initiatives,” according to the letter.

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