Nanoco warns settlement in its IP lawsuit will be at ‘lower end of expectations’
Shares in Manchester tech business, Nanoco, fell by more than 15% in early trading this morning, following the latest update on its intellectual property lawsuit against South Korea electronics giant Samsung.
The University of Manchester spin-out, which develops materials used in the manufacture of monitors and TV screens, announced last Friday that it had reached an agreement with Samsung.
It asked for a stay to the trial, due to start in the US last Friday, to allow the detailed terms of a binding agreement to be finalised during a 30-day period.
Shares in the firm soared more than 50% in early trading on January 6, following news of the settlement.
In early trading they jumped from the previous evening’s closing price of 42.60p per share, to 70.70p, before settling down to just under 60p per share, and closing the day at 55.80p.
However, following the latest update this morning (January 9), the share price dropped to 46.69p per share.
In mid-morning shares were trading at 40p per share, but the stock closed the day at 47.70p, which represented a 14.52% fall on the previous closing price.
Today, Nanoco said the settlement process with Samsung “requires further negotiations and continues to operate within the control of the US judicial system, so the outcome of the litigation, its settlement, and timing, are not wholly within the control of the two parties”.
As a result, the value and terms of any final agreement are not yet certain.
Details of any final agreement with Samsung are covered by a confidentiality agreement to protect the commercial interests of both parties during the ongoing negotiations.
However, Nanoco warned today that, following consultations with its advisers in the case, the gross settlement value should be expected to be towards the lower end of the range of expectations for a successful jury trial outcome as previously guided by the company.
Also, historical precedent shows that any final agreement is likely to be a one-off payment, with no forward royalties, for the full and final settlement of all current and future patent litigation between the parties in all jurisdictions.
The company expects to issue a further update on the final agreement following the completion of the further negotiations between the parties.
Christopher Richards, non-executive chairman of Nanoco, said: “The board, having taken extensive advice from its advisers in the case, has concluded that the draft settlement offer provides a reasonable and immediate fair value for the litigation.
“The draft settlement accounts for both the potential downside risks of a jury trial, followed by what would likely be very protracted appeal processes, as well as the considerable adverse impact of further litigation costs and funding, and on the time value of money in a rising interest rate environment.”
He added: “Whilst there is still a degree of uncertainty around the final settlement agreement, we are working with Samsung to finalise the detailed agreement within the allowed 30 day period and look forward to updating shareholders further in due course.”
Nanoco chief executive, Brian Tenner, said: “A settlement provides certainty to all our stakeholders and further reinforces our confidence in the validity and enforceability of the group’s global patent portfolio.
“I am more confident than ever about Nanoco’s future prospects. A settlement provides a firm financial underpinning to focus on our organic business, which has made significant progress over the last three years.
“It also demonstrates the company’s willingness to vigorously defend our global IP portfolio against any potentially infringing parties in the wider market.”
