Potential InterDigital Buyout by Samsung

A potential patent bidding war could be brewing as Samsung Electronics is considering purchasing the patent portfolio of InterDigital (NASDAQ: IDCC), according to Bloomberg.

InterDigital, a Pennsylvania-based company has about 8,800 patents on inventions used in devices ranging from the Apple (NASDAQ: AAPL) iPhone to Google's (NASDAQ: GOOG) Android-based handsets and Research In Motion's (NASDAQ: RIMM) BlackBerry. Since InterDigital opened its doors to a bidding war on July 18, the stock price has doubled. Friday, IDCC ended the day at 68.10 with after hours trading showing slight increases.

Samsung is examining InterDigital in order to keep pace with other smartphone giants. Benzinga reported Tuesday that Google's Android operating system just claimed 48 percent of the smartphone global market share and Apple's iPhone recently overcame Nokia (NYSE: NOK) to become the world's largest leading individual smartphone vendor coming in second with a global market share of 19 percent.

Analysts at Algorithm Capital and Dougherty value InterDigital at approximately $5 billion with the potential to increase if Google, Apple, or Microsoft (NASDAQ: MRFT) decides to make an offer. Google recently lost a bidding war to a group including Apple and Microsoft in the sale of Nortel's $4.5 billion cellular technology portfolio.

William Merritt, InterDigital's Chief Executive Office, noted the patent's to be "deeper and stronger" than Nortel's. With this statement about the power of InterDigital's patents, how much more money could potentially be spent on IDCC if a bidding war occurs?

Action Items:

Bullish:

• Patents have been hot lately, Nortel's patents got picked off for $4.5 billion, Google bought some IBM (NYSE: IBM) patents, Carl Icahn trying to get Motorola Mobility (NYSE: MMI) to sell some patents.

Bearish:

• All IDCC has is patents, the company actually lost money in its last quarter and missed expectations. Shares have run up drastically on expectations of a sale for IDCC, if it doesn't happen, we could see a huge drop in share price.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.