US IP licensor Transmeta puts itself up for sale

25 September 2008

US chip maker turned intellectual property  licensor Transmeta Corporation yesterday said that it had initiated a process to find a potential buyer for itself, even as it announced two agreements with Intel accelerating the annual technology and intellectual propert licensing payments from five year into a one-time, non-refundable payment of $91.5 million in the third quarter of 2008.

The deal with Intel, one of the two it sgned with the chipmaker, would enable Transmeta to strengthen its balance sheet prior to its sale. Last year, Transmeta entered a technology licencing deal with Intel in December 2007, 10 months after filing an intellectual property lawsuit against it, and settled for an initial $150 million, and five annual payment of $20 million a year between 2009 and 2013 for a perpetual non-exclusive license to all Transmeta patents and patent applications, including those acquired by Transmeta before 31 December  2017.

The annual payment will now be consolidated into one and paid as a on-time consolidated $91.5 million before the end of Transmeta's current fiscal quarter ending 30 September 2008.

"Receiving these one-time payments strengthens our balance sheet and allows potential buyers to more accurately evaluate our company," said Les Crudele, president and CEO of Transmeta. "This year, as a result of our successful licensing activities, we will collect at least $265 million of cash payments for our intellectual property and patents."

Crudele said the company expect its intellectual property portfolio and licensing business, combined with "our solid balance sheet", to be attractive to potential bidders. It is being advised by financial advisors Piper Jaffray & Co.

"As we proceed with the process, we remain focused on working with potential licensees, as well as developing and validating our IP blocks so that we can broaden our target market," he added.