Samsung Electronics Co recently offered to buy BlackBerry Ltd for as much as US$7.5 billion, seeking its valuable patents as it battles Apple Inc in the corporate market, according to a person familiar with the matter and documents seen by reporters.
South Korea’s Samsung proposed an initial price range from US$13.35 to US$15.49 per share, representing a premium of 38 percent to 60 percent over BlackBerry’s current trading price, the source said on Wednesday.
Representatives from the two companies, which are working with advisers, met last week to discuss a potential transaction, the source said, asking not to be identified because the conversations are private.
The Waterloo, Ontario-based company said in a statement that it “has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry.”
Shares of BlackBerry, which soared nearly 30 percent following the report, fell back about 15 percent in after-hours electronic trading following the statement.
Samsung also told reporters in Seoul that it has no plans to acquire BlackBerry. “Media reports of the acquisition are groundless,” a company spokeswoman said.
Separately on Wednesday, Canadian newspaper Globe and Mail reported BlackBerry has shunned a handful of takeover overtures in recent months as its board and largest investor think its restructuring strategy will deliver greater shareholder value than current acquisition offers.
The board believes offering prices, some in excess of US$7 billion, fall well below BlackBerry’s potential asset value in the next few years, according to the Globe and Mail report.
Samsung’s strength as the No. 1 global smartphone marker has been built on making devices for the consumer market, which has become crowded in recent years. With a takeover of BlackBerry, Samsung could make greater inroads into the corporate market, where it has trailed rivals.
However, any tie-up with Samsung would require the blessing of Prem Watsa, whose Fairfax Financial Holdings Ltd is a major BlackBerry shareholder. The bid would also face regulatory scrutiny in both Ottawa and Washington. Under Canadian law, any foreign takeover of BlackBerry would require government approval under the Industry Canada Act.
BlackBerry’s secure networks manage the e-mail traffic of thousands of large corporate customers, along with government and military agencies across the globe.
Samsung and its advisers also anticipate a complex approval process at the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for national security implication, the documents reviewed by reporters show.
Samsung thinks that acquiring less than 100 percent of BlackBerry, perhaps keeping part of it as a publicly traded entity with an independent board, could help secure easier CFIUS approval. However, it doubts whether it can accomplish its strategic objectives with less than 100 percent ownership, the documents show.
In the third quarter of last year, revenue at BlackBerry, which is increasingly focusing on providing services like secure corporate networks, fell to US$793 million from US$1.19 billion a year earlier, falling short of analysts’ expectations of US$931.5 million.
Shares of BlackBerry jumped as much as 30 percent to US$12.63 on heavy volume in afternoon trading in New York.
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