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AOL announced Monday that it has agreed to sell more than 800 of its patents and related applications to Microsoft for a little more than $1 billion. As part of the deal, AOL will also give Microsoft non-exclusive access to its remaining 300-odd patents.
Reuters reports AOL's shares jumped 37 percent in morning trading after the news, in large part because the Internet company says that it will pass on a "significant portion of the sale proceeds" to shareholders.
The Wall Street Journal reports that the apparent catalyst for the sale was a letter sent to AOL's board from activist shareholder Starboard Value LP six weeks ago. Calling AOL's patent holdings "underutilized," Starboard Value estimated that the company could make $1 billion in licensing income by properly monetizing the patents.
The transaction is expected to be completed by the end of 2012. If it falls through, Microsoft will pay a $211.2 million termination fee.
You can read more about the deal over at the Wall Street Journal.