Ottawa’s WiLAN Acquires International Road Dynamics for $63.5M
WiLAN, the Ottawa-based company, has decided to move toward the ‘Industrial Internet of Things’ sector and beyond the traditional intellectual property and patent licensing role it has played in the market with the purchase of International Road Dynamics for a whopping $63.5 million.
Patent and intellectual property companies have made money by acquiring technology patents and licensing them to other firms. The practice lacked growth opportunities, which drove WiLAN to decrease the practice.
According to the company, the patent licensing business has made it difficult to predict growth trends. Due to several contested patents that resulted in court battles with unpredictable results, the company has been unable to predict growth patterns. This also made for wild fluctuations in revenue quarter-to-quarter and year-to-year.
On a positive note, the patent licensing company has amassed a significant amount of cash, totalling $1431.1 million at the end of last year. WiLAN used some of the cash to acquire International Road Dynamics.
Other changes to the company include a name change. WiLAN has now become Quarterhill. The move to officially change its name was announced in June 2017.
CEO Jim Skippen has stepped down, and WiLAN’s former chief financial officer Shaun McEwan has taken over as interim CEO.
Mr. Skippen, a patent lawyer by trade, will remain with the company as executive chairman until his retirement in 2018.
Due to the change in the company is direction, the patent lawyer’s background no longer fits directly with the company’s objectives. Mr. Skippen said in a press release that he agreed with the decision, and the direction the company was taking fell in line with his plans to retire.
The board unanimously asked the patent lawyer, Mr. Skippen, to stay on as a Board member, to which the patent lawyer agreed.
“When Jim arrived at WiLAN, it had largely stopped operations. There was a serious question before Jim joined as to whether WiLAN could continue as a viable going concern since WiLAN had almost no cash, no permanent employees, and no ongoing revenues or backlog,” said Paul McCarten, Chairman of WiLAN’s Board.
“Today it has a much higher share price and market capitalization, a significant intellectual property portfolio, a strong balance sheet and significant backlog. There is no doubt that WiLAN is a much stronger company than when Jim arrived,” pointed out McCarten.
Company leaders believe that the acquisition is a step in the right direction for the company and that it stands to ‘take off’ into the industrial space.
The patent lawyer, Mr. Skippen, had led the intellectual property company for over nine years.
Under Mr. Skippen’s leadership, WiLAN achieved many notable successes, including:
Increasing WiLAN’s cash position from less than $1 Million CDN to more than $140 Million CDN.
Signed license agreements with more than 300 companies worth in excess of $850 Million CDN.
Increasing WiLAN’s market capitalization from under $30 Million CDN to over $330 Million CDN.
Increasing WiLAN’s patent portfolio from less than ten patents to over ten thousand patents.
Introducing a dividend which has been increased six times.
Attracting more than 40 portfolios from many partner companies.
Increasing WiLAN’s staff complement from one (himself) to 66 employees.
The newest acquisition under the patent lawyer’s leadership, International Road Dynamics, is based in Saskatoon and has offices in the United States and overseas.
The data generated and collected through the system that manages over 16,000 roads through its proprietary system is an extremely valuable analytics tool. The value of the data continues to rise as more is collected.
According to McEwan’s interview with the Ontario Business Journal, International Road Dynamics has a robust portfolio of over 80 pending and issued patents. The quality and depth of the portfolio is exceptional. The patent portfolio promises to increase WiLAN’s overall patent strength.
Furthermore, due to the diligence of patent lawyers and thorough work done by the International Road Dynamics team, the patent protection of the 80 pending and issued patents is strong. Patent lawsuits are not expected to arise from the existing portfolio of patents.
Background
WiLAN began restructuring in October 2015. The patent-licensing company announced it would spin off its research and development unit and cut its dividend shareholders. The restructuring of the company affected 30 percent of the WiLAN’s workforce. A shift in the business focus was essential in the company’s restructuring efforts. The company decided that instead of owning patents directly; it would focus on licensing patent portfolios owned by other companies and providing turnkey solutions for companies to monetize their patents.
That same year, WiLAN announced that it had gained a new portfolio of 7,000 patents in technology related to access memory, flash memory, semiconductor manufacturing, and other technologies.
WiLAN has been highly successful in specializing in licensing companies and unlocking the value of intellectual property by managing and licensing their patent portfolios.
It operates in various markets, including automotive, digital television, Internet, medical, and wireless communication technologies.
Founded in 1992, WiLAN is listed on the TSX and NASDAQ and is included in the S&P/TSX Dividend and Dividend Aristocrats Indexes.
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