Have you noticed that patent portfolios are drawing a lot of investor attention these days? Forget the Mega-Google-Motorola acquisition whose sole admitted purpose was the acquisition of Motorola’s patent portfolio. Board rooms and courts are full of talks and controversy about intellectual properties issues which have nothing to do with smart-phone technology.
The opportunities are not limited to high-profile large-cap companies, a prime example of that is a small but very successful global company from New Jersey. Falken Industries Ltd which trades on the OTC under the symbol FLKI has more than 3 million dollars, at book, in extensive and enforceable intellectual properties.
Now it is axiomatic that larger companies with greater financial and marketing resources would presumably be best positioned to exploit these advantages. In FLKI’s industry, and notably in its vehicular care activity, names like 3M (which owns Meguiars), Clorox (which owns Armor-All), Honeywell (which owns Holt), are just three of the majors which come to mind as entities that would greatly benefit from FLKI brands, product development, management and research contributions and its global distribution networks - advantages they do not presently own. With a market cap of approximately $ 5 million, control of this package could conceivably be acquired by any one of these colossus (or any of hundreds of US companies seeking instant European and global distribution for its wares) for little more than pocket change, even at a premium of 200% over the quoted share price.
“Intellectual properties can be used strategically and tactically”, says Manuel Garcia, communications officer, “they help our company protect its products, and whichever way marketed, protect and cement its revenue stream.”
This explains FLKI’s determination in amassing a pipe line which bests 160 products and a collection of intellectual property which has always been a priority. It would not be the first time a well heeled acquirer made suggestions to acquire the company or its brand and intellectual property portfolio. And it is not to be dismissed that if the company’s shares, battered by the crisis continue to seriously undervalue the company that some astute competitor simply starts to acquire shares, with a relatively large float for a company its size and a reported 4200 shareholders the thought is attractive. In a recent valuation report, it was opined that just acquiring FLKI’s distribution network and logistic facilities to expand distribution of an acquirer’s product mix in Europe would cost more – with great risk if done alone – than the market cap of this company. Moto – this company is worth acquiring just for the step in feature of its European distribution, and the $ 3 million + in intellectual property and its ongoing multi-million dollar valued business and brand(s) comes free.
Given the tremendous recent interest in and valuations for intellectual properties, it is more than likely that FLKI will start looking for ways to monetize them to a greater extent than ever before. The company all but confirms this. “We are looking at alternatives for the intellectual properties we own. Over the past year we have seen the value of our intellectual properties rise substantially as other industry players increasingly understand the strategic and economic value of this type of asset” concluded Garcia.
Falken Industries Ltd OTC : FLKI is a diversified industrial conglomerate that operates in Chemicals, Wet Wipe and Biodegradable Technology. Falken Industries Ltd is the concept behind more than 160 products distributed through a network of global platforms and the recipient of trade awards for innovations, biodegradability and environmental and health quality standards.
Author Resource:-
John David is one of the nation's most respected expert analysts on the Automobile After-Market Industry. He holds appointments as a covering analyst with some of the world's largest players. He also conducts a private practice as a consultant in capital raises, mergers and acquisitions for small to medium size manufacturers in the consumer, professional and industrial chemical, wipe, wet wipe and car and vehicular care industries.
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