RPX Corp. on Tuesday announced a deal to be acquired by private equity firm HGGC for $555 million, the latest in a series of shake-ups at the San Francisco-based defensive patent aggregator in recent years.
The move follows RPX’s disclosure in February that it was reviewing a full range of strategic alternatives amid flat revenue and massive impairment losses in the fourth quarter of 2017. According to the announcement, Palo Alto-headquartered HGGC would initiate the all-cash tender offer for RPX’s stock at $10.50 per share.
The deal, which was unanimously approved by RPX’s board of directors, is expected to close in the second or third quarter of 2018, the company said.
“After receiving and reviewing numerous proposals and indications of interest, as well as considering RPX’s current operations and future prospects, the board is entirely confident that this transaction provides great, certain and immediate value to RPX stockholders,” RPX chairman Shelby Bonnie said in a statement.
A spokeswoman for RPX, which is incorporated in Delaware, declined to provide further on-the-record comment on Wednesday.
For HGGC, which was co-founded by ex-San Francisco 49er and Pro Football Hall of Fame quarterback Steve Young in 2007, the agreement marked what appeared to be the middle market private equity firm’s first investment in a patent business, IAM Magazine reported on Tuesday.
HGGC CEO and co-founder Rich Lawson said RPX’s mission of de-risking patent litigation aligned with the goals of his own firm, which claims $4.3 billion in cumulative capital commitments.
“We fully support the vision of the company to build a much-needed clearinghouse in the broader market for patents and will continue RPX’s decadelong commitment to never assert patents,” he said in a statement.
Since its founding in 2008, RPX has offered patent-risk and discovery management solutions by acquiring dangerous patents on behalf of its 320 members, offering patent litigation insurance, and compiling data that helps demystify the industry.
As of March 31, RPX had invested $2.4 billion to acquire more than 26,000 U.S. and international patent assets and rights, the company said. RPX, a subsidiary of global e-discovery management firm Inventus, primarily serves clients in eight sectors, including automotive, consumer electronics, financial services and semiconductors.
The Recorder has reported that the company assembled in 2014 the support of 30 companies, including Google Inc. and Cisco Systems Inc., to purchase 4,000 patents that originally belonged to Nortel Networks Corp., a former telecommunications and data networking equipment manufacturer based in Canada.
In 2012, RPX began offering patent litigation insurance that is backed by a Lloyds’ syndicate. RPX also signed a massive licensing deal last August with Swiss company The Kudelski Group for its 4,900 worldwide patents in video streaming technology.
However, RPX has also seen the urgency of its mission diminish as Supreme Court rulings and new procedural tools have helped companies fend off nonpracticing entity litigation. Since the company went public on the Nasdaq in 2011, its stock has suffered several drops with only minor rebounds. The company debuted at $28.90, but dropped to an all-time low of $9.04 in December 2012.
As of close on Wednesday, the company was trading at $10.42.
RPX underwent a leadership transition starting in early 2017 when John Amster stepped down as CEO. He was replaced on an interim basis by Marty Roberts, who has since taken over the role in a full-time capacity. Last September, Mallun Yen, a patent reform advocate and part of the team that launched, relinquished her day-to-day role as executive vice president but has stayed with the company as a director.
In December, RPX announced more executive changes to its sales team, which included the departure of Robert Heath as the company’s chief financial officer.