Reuters today reported that Samsung Electronics offered to buy BlackBerry Ltd for about $7.5 billion. Sources have told that executives from the two companies met last week to discuss about the transaction, asking not to be identified since the conversations are private. The report states that Samsung has offered a price that’s at least 37 percent more than the current rate.
Previous Partnership
Two months ago, BlackBerry announced it was joining hands with one of its biggest rivals, Samsung, for a management-services partnership. It was the first time they worked together for a major product.
The Offer
Samsung is believed to have proposed a 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, as per Reuters report.
Samsung’s gain in the deal
Samsung is currently the number 1 smartphone maker in the world, manufacturing devices meant for consumer market. With this partnership, Samsung can get into the corporate market, which has been BlackBerry’s forte.
“How many Samsung phones do you see in offices? This would be Samsung’s chance to get into the enterprise,” said BGC Partners analyst Colin Gillis.
Another major factor for this deal is BlackBerry’s patent portfolio, composed of about 44,000 patents and worth more than $1.43 billion.
Edward Snyder, managing director of Charter Equity Research, said it made sense for Samsung to target BlackBerry’s patents in its outgoing battle with Apple and others.
Legal obstacles
If the bid is real, it would face regulatory scrutiny from Canadian government. Under Canadian law, any foreign takeover of BlackBerry would require government approval under the Industry Canada Act. In 2013, the Canadian government had rejected BlackBerry’s sale to China’s Lenovo Group due to security concerns. BlackBerry’s secure networks manage the email traffic of thousands of large corporate customers, along with government and military agencies across the globe.
When asked about the government’s stand, spokesman for Industry Minister James Moore told that “Industry Canada does not comment on speculation or rumors.”
BlackBerry denies the report
BlackBerry said in a statement that the company “is aware of certain press reports published today with respect to a possible offer by Samsung to purchase BlackBerry.”
“BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry.”
“BlackBerry’s policy is not to comment on rumors or speculation, and accordingly it does not intend to comment further.”
Canadian newspapers reported that BlackBerry refused a few takeover offers in the recent months as they think its restructuring strategy will get them better shareholder value. Its board believes the offers fall well below BlackBerry’s potential asset value. BlackBerry launched its long-awaited Classic model on Wednesday, hoping to help win back market share and woo customers still using older devices with a keyboard. The phone resembles its once popular Bold and Curve handsets.
BlackBerry shares go up, and down!
Shares of BlackBerry went up by as much as 30 percent after the Reuters report, but fell by 15 per cent after BlackBerry issued the statement denying the offer. While the reports maybe true or maybe just another rumor in the tech industry, but it surely had its effect on the market.
Update : Both companies have officially denied the reports.
Sameer