New York-based AOL (AOL) said it plans to return some of the sale proceeds to its shareholders.
The company's shares jumped $6.46, or 35 percent, to $24.77 in premarket trading. Microsoft shares slipped 22 cents to $31.30.
After the sale, AOL said it will still hold over 300 patents and applications covering a variety of core and strategic technologies including advertising, search, content generation, social networking, mapping, multimedia, and security among others.
Tim Armstrong, AOL's chairman and chief executive, said the deal with Microsoft resulted from a "robust" auction of the company's patents. He said the company's license agreement with Microsoft shows that it still holds a valuable patent portfolio.
"The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value," Amstrong said in a statement.
AOL said it will determine the best way to distribute a "significant portion" of the sale proceeds to shareholders before the sale closes, which is expected to happen by the end of this year.
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