Transmeta puts company up for sale, to collect $91.5M from Intel

"Receiving these one-time payments strengthens our balance sheet and allows potential buyers to more accurately evaluate our company. 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," commented Les Crudele, president and CEO of Transmeta.

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 9/25/2008

To ultimately enhance value for its stockholders, Santa Clara, Calif-based semiconductor IP company Transmeta Corp announced today that it will sell the company after exploring a range of alternatives and after strengthening its balance sheet, and said separately that it has entered into two agreements with Intel Corp for the licensing of certain technologies and IP and for the accelerated payment of its receivables from Intel, to result in a Q3 payment of $91.5 million.

“Receiving these one-time payments strengthens our balance sheet and allows potential buyers to more accurately evaluate our company. 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. We expect that our intellectual property portfolio and licensing business, combined with our solid balance sheet, will be attractive to potential bidders, and we look forward to conducting a timely process to maximize value for our stockholders. 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,” commented Les Crudele (pictured left), president and CEO of Transmeta, in a statement.

Interested parties are invited to contact the company’s financial advisor at Piper Jaffray & Co.

In terms of its agreements with Intel, the first agreement is a fully paid-up, non-exclusive technology licensing agreement that provides for Transmeta to deliver a copy of certain proprietary Transmeta computing technologies to Intel and grants to Intel a non-exclusive license to use and exploit those technologies commercially.

The second agreement is an amendment to the previously announced settlement, release and license agreement that Transmeta and Intel entered into on December 31, 2007, which granted to Intel a perpetual non-exclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta, now existing or as may be filed on or before December 31, 2017.

Among other things, that settlement agreement provided for Intel to make five annual future payments to Transmeta of $20 million per year for each year from 2009 though 2013, and this amendment accelerates Intel’s remaining future payment obligations under the agreement.

As such, Transmeta expects to receive cash payments from Intel totaling $91.5 million before the end of its current fiscal quarter ending September 30.

"We are very pleased to have achieved these two additional agreements with Intel," said Les Crudele, president and CEO of Transmeta. "We believe that the agreements reflect the technical merit and industrial value of Transmeta’s legacy computing technologies and strengthen our balance sheet.”

Earlier this year, Transmeta received an unsolicited acquisition offer from investment banking firm Riley Investment Management LLC for $15.50 per share in cash, but Riley withdrew its offer as Transmeta did not respond in the time given by Riley.