Nanoco Shares Plunged 34% on Samsung’s $150M Patent Settlement

The Nanoco Group PLC (LON: NANO) share price plunged 33.9% after revealing the details of its settlement with Samsung to avoid further costly litigation. Investors were disappointed by the $150 million settlement since the company would only keep $90 million, with the rest going to cover litigation costs.

Investors expected a larger settlement, but Nanoco had warned the markets that the settlement would likely be much lower than it had initially planned since the case did not go to trial. The settlement terms could have been more favourable given that it was structured as a sale of non-core patents and a global, perpetual, fully paid-up licence agreement.

Therefore, Nanoco is not entitled to any further payments from Samsung, which will continue using the non-core patents acquired through the settlement on a global scale perpetually. Many investors were expecting a higher settlement figure. 

Investors were also unimpressed by the fact that Nanoco gets to keep just $90 million of the $150 million it will receive from Samsung as the rest of the monies cover the case's legal costs. Given the massive costs associated with the litigation, it makes sense why Nanoco’s executives decided to avoid further litigation. 

Unlike Samsung, which has revenues of over US$245 billion and can afford to pay hundreds of millions in legal fees, Nanoco does not have the same cash reserves, and any further litigation costs would have eaten into any future settlement.

Chris Richards, Nanoco Group’s Chairman, said: “This has been a long and hard battle for Nanoco. The outcome is remarkable, given the relative scale of Nanoco and Samsung. The settlement value is almost three times our own low-case damages model; settling now avoids the risks associated with further litigation and the adverse impact from the time value of money in an appeals process that would have extended for years. Even more importantly, it validates Nanoco's core IP, which we will continue to defend vigorously.”

After the settlement validated its core IP, the company also noted that it had gotten more interest from potential customers in its leading nano-articles products. 

*This is not investment advice. 

The Nanoco share price chart.

The Nanoco share price crashed 33.9% to trade at 24.39p, from Thursday’s closing price of 36.90p.