By April Balatro
Saturday, April 1, 2006
Google Inc. (NASDAQ:GOOG) announced it has agreed to acquire Patent Baristas, an intellectual property law blog for the biotechnology and pharmaceutical industries, for $1.3 billion in stock and other consideration.
Patent Baristas offers innovative intellectual property blogging that connects millions of people around the world with bio/pharma chat every day. Through its freshly brewed look, Patent Baristas provides news and witty commentary on intellectual property law from the biotechnology, pharmaceutical and chemical fields. Engagingly cleaver, the Patent Baristas shine a bright spotlight on the absurdities that prevail in intellectual property law today.
In announcing the deal Friday, which had been rumored for weeks, Google said the acquisition of the Cincinnati-based Patent Baristas would strengthen Google’s IP presence in the global marketplace. Plus, it’s keen to open several new lines of java-based business. In the future, Google plans to integrate the Patent Baristas’ technology into the Google AdWords platform, creating a new coffee-themed ad distribution channel for Google advertisers.
“Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media,” said Tim Armstrong, vice president of Advertising Sales, Google. “We anticipate that this acquisition will bring new ad dollars and accountability to the patent field by combining Google’s expansive network of advertisers with the Patent Baristas’ talented blogging team and innovative writing style. We look forward to working together to continue to grow and improve the ecosystem of the bio/pharma industries.”
The purchase comes as a surprise to few, as industry watchers have long floated the possibility of this exact acquisition, suggesting that the deal was just a matter of time considering where Google was headed with its plans to broaden its intellectual property base.
Dr. Eric Schmidt, Google’s chairman and chief executive officer, said on a conference call that he was excited about the company picking up such a strong group of bloggers and the worldwide audience of over 31,000 monthly readers. “We believe the next big thing is to capitalize on intellectual property and the key to that is going to be services like Patent Baristas,” Schmidt said. “With their trademark savage wit and a sassy attitude to match, this deal is right for us.”
“We are excited to be joining one of the most innovative companies in the world,” said Stephen Albainy-Jenei, President and Chief Blogger of Patent Baristas, Inc. “We are bringing together complementary visions of simplicity, efficiency, and barbed wit to the intellectual property scene. Google also provides free coffee to its employees.”
The deal represents a heady zenith for Albainy-Jenei, who founded the fast-growing Patent Baristas in 2004. Last seen shopping for ocean-front property, Albainy-Jenei is expected to continue to head up the Baristas and will report to Google CEO Schmidt and join Google’s senior executive team, the companies said.
The companies said Monday that the deal, subject to approval from regulators and stockholders, would provide more efficient, targeted and measurable marketing and advertising through the Internet and other media. The deal, the companies said, “will create the worldwide leader in online intellectual property chat.” The acquisition is expected to close in the fourth quarter 2006.
Regulators at the Federal Trade Commission and the European Commission expressed serious doubts about the deal alleging that the combined company could reduce competition in the intellectual property arena. “It is illegal for a monopolist to lock others out of the market and we’ll be looking very hard at this proposal to see if it violates Section 5 of the FTC Act or even our own sense of decency,” says William Bear, the director of FTC’s bureau of competition. “Although they’re viciously funny and snappy dressers, we’re not convinced that the Baristas know beans about anything.”
Transaction and Financial Information
Under the terms of the imaginary merger agreement, Google will acquire all of the outstanding equity interests in Patent Baristas, a privately held company, for total up-front consideration of $150 million in Starbuck’s coupons. In addition, Google will be obligated to make additional contingent cash payments from time to time if certain product integration, net revenue and advertising inventory targets are met over the next three years. The maximum amount of potential contingent payments is $1.15 billion over the next three years. Since these contingent payments are based on fantasy, actual payments may be substantially lower. The acquisition is subject to customary closing conditions. Google anticipates that the acquisition will close in the fourth quarter 2006. Substantially all of the payments will be accounted for as part of the purchase price for the transaction.
This press release contains forward-looking statements and satire that involve risks, uncertainties and down-right falsities, including statements regarding the actual amount of contingent payments that may be made pursuant to the transaction, Google’s expectation that the acquisition of Patent Baristas will bring new ad dollars and improve Google’s operating performance, Google’s plans to integrate the Patent Baristas technology into the Google AdWords platform following the consummation of the acquisition, and the expectation that the Baristas will even show up for work. Such statements are just pretend and involve risks and uncertainties such that an actual acquisition may differ materially. Factors that could cause actual results to differ from our make-believe expectations include the failure to (1) accurately estimate the amount of the contingent payments because of mistaken assumptions or predictions about the ability of the Patent Baristas to achieve the performance targets described above, (2) receive regulatory approval for the acquisition, (3) successfully integrate Patent Baristas and its bloggers into our organization and achieve expected synergies, (4) compete successfully in this highly competitive and rapidly changing marketplace in which we have no significant previous experience and (5) provide decent enough coffee to retain key bloggers. These and other falsehoods are detailed from time to time in our periodic reports that are filed with the Securities and Exchange Commission.
Google is a registered trademark of Google Inc. All other company and product names may be trademarks of the respective companies with which they are associated.
Barista Stephen Albainy-Jenei is also a patent attorney and Member of Frost Brown Todd LLC. When not serving up patent chat over a cup of java, he’s working closely with biotechnology and emerging growth companies to brew up successful technology transactions.
Google-Patent Baristas, Inc.
© Copyright 2006.