Canadian handset maker BlackBerry and its South Korean rival Samsung Electronics have dismissed rumours suggesting that the two companies discussed a potential tie-up.
Yesterday, Reuters cited corporate documents and a person familiar with the matter as…
Canadian handset maker BlackBerry and its South Korean rival Samsung Electronics have dismissed rumours suggesting that the two companies discussed a potential tie-up.
Yesterday, Reuters cited corporate documents and a person familiar with the matter as saying that Samsung recently offered to buy BlackBerry for a minimum of US$7.5bn, in an attempt to better compete against giant Apple.
However, the potential target issued a statement in response to the report, saying that it “has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry”.
Samsung was not immediately available to respond to a request for comment but a spokesperson for the company was quoted by Reuters as saying that reports of the acquisition were groundless.
The newswire had earlier reported that executives from the two companies met last week to discuss a potential deal and had engaged advisers.
According to the documents quoted by Reuters, Samsung and its advisory team expect that a takeover bid would face significant regulatory hurdles, as the acquisition would need to be approved by the Committee on Foreign Investment in the United States (CFIUS), which reviews deals that may pose a threat to national security.
Samsung reportedly believes that acquiring less than 100% of BlackBerry, and possibly floating the remaining shares would help it gain regulatory approval, although it doubts whether a partial ownership would allow it to achieve its strategic goals.
A takeover deal would also need to be green-lighted by the Canadian government, particularly considering the fact that BlackBerry’s secure server network handles confidential corporate and government emails. Canadian law entitles the federal government to veto proposed foreign takeovers if it considers they would not provide a “net benefit” to the country or could threaten national security.
Samsung’s reported move is aimed at increasing its market share in the corporate and government segments, where it currently lags behind Apple.
Ontario-based Blackberry has also been struggling to compete with Apple’s touchscreen devices and, in mid-2013, said it was exploring strategic options including an outright sale.
Canada’s The Globe and Mail reported yesterday that the company has shunned a few takeover offers in recent months as its board of directors and largest investor, Fairfax Financial Holdings, continue to back CEO John Chen, who was appointed in November 2013 with the aim of implementing a new turnaround strategy.
Sources close to the company told the newspaper that no sale process is in place and that the board feels prospective bids received so far, some in excess of US$7bn, fall below BlackBerry’s potential value in the next few years.
As TelecomFinance went to press, BlackBerry had a market capitalisation of US$5.1bn.
In September 2013, the company agreed a preliminary US$4.7bn deal with a consortium led by Fairfax but its board decided to abandon the sale in favour of a refinancing, which saw the shareholder increase its stake in the company to 17%.
A few weeks later, Blackberry was rumoured to be in takeover talks with Chinese state-owned electronics company Lenovo but the potential deal would reportedly have been blocked by the Canadian regulators over security concerns.
BlackBerry’s Q3 2014 revenues plummeted to US$793m from US$1.19bn in the previous year.
