NEW YORK -- AOL Inc. will get US$1.06 billion cash by selling more than 800 patents to Microsoft Corp. following a "robust auction'' of the intellectual property.
AOL, the parent company of The Huffington Post, says it will return a "significant portion'' of the proceeds to its shareholders once the deal closes.
The company's shares jumped $6.46, or 35 per cent, to US$24.77 in premarket trading after the announcement. Microsoft shares slipped 22 cents to $31.30.
The online media company will receive a licence to continue using the patents being sold to Microsoft and will still have 300 patents in its portfolio.
"The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,'' said Tim Armstrong, AOL's chairman and CEO.
"We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.''
The transaction, which is subject to review under U.S. competition law, is expected to close by the end of 2012.