UPDATED: BlackBerry denies Samsung takeover rumours

Would value BlackBerry at up to $7.5 billion

 
BlackBerry Passport seen against a dark background
(BlackBerry)

UPDATE: BlackBerry says it has “not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry.”

BlackBerry shares surged this afternoon on reports that South Korean electronics giant Samsung had approached the company about a takeover. Reuters reported the potential deal, citing unnamed sources:

South Korea’s Samsung proposed an initial price range of $13.35 to $15.49 per share, which represents a premium of 38 percent to 60 percent over BlackBerry’s current trading price, the source said. […]

The offer price would imply an enterprise value of $6 billion to $7.5 billion for BlackBerry, assuming conversion of $1.25 billion of convertible debt, according to the documents.

Neither company has commented on the reports.

This is not the first time BlackBerry has been the object of takeover rumours. In 2013, original Research in Motion cofounders Mike Lazaridis and Douglas Fregin were reported to be putting together a deal. Chinese computer maker Lenovo was also regarded as a potential suitor around the same time. Major BlackBerry shareholder Fairfax put together a $4.7 billion deal to take BlackBerry private in October 2013, then the next month decided not to proceed.

Here is what BlackBerry’s stock did today, closing the day up almost 30%:

Chart showing BlackBerry stock performance in the month to Januaery 14, 2015

An obvious question is why Samsung would want BlackBerry. Samsung would of course get access to BlackBerry’s 44,000 patents. (CEO John Chen, in a reorganization of the company, setup a new group called BlackBerry Technology Solutions to, among other things, manage and pursue licensing opportunities for its patents.) But there are signs that the mobile patent wars are actually dying down. Perhaps more important for Samsung is that acquiring BlackBerry could give it a huge edge when it comes to security, allowing it to better serve the lucrative, high-margin business and government clients that have been BlackBerry’s bread and better. That’s a market Samsung hasn’t really been able to crack. In 2013, it revealed a secure enterprise service called Knox, but the rollout has been slow.

In November, the two companies announced a partnership for BlackBerry to bring its enhanced security features to Samsung’s smartphones and tablets, which was analysts viewed as a good move for both companies. Even so, Samsung’s products operate on Google’s Android platform, which doesn’t have the best track record when it comes to security. On the other hand, BlackBerry’s reputation for providing a secure service has remained in tact, even through all of the company’s troubles. Recall how after the hacking attack on Sony, the company resorted to using old BlackBerrys to communicate. And of course, Samsung would also acquire BlackBerry’s existing enterprise customers in such a transaction.

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