Canada’s BlackBerry (TSX:BB) has agreed to buy California-based software rival Good Technology for US$425m in cash in an effort to boost its mobile security platform.
Canada’s BlackBerry (TSX:BB) has agreed to buy California-based software rival Good Technology for US$425m in cash in an effort to boost its mobile security platform.
The move aligns with the Ontario-based smartphone maker’s move into the software market as its handsets lose market share to those operating on Apple’s iOS or Google’s Android systems.
BlackBerry said in a statement that the purchase will enable it to expand its mobile security platform with applications that can be used by all mobile devices, irrespective of operating system.
The company expects the acquisition to be accretive to earnings and cash flow within the first year. It also expects to realise about US$160m in GAAP revenues from the target within a year.
Blackberry CEO John Chen (pictured) said the deal will help the company to “better solve one of the biggest struggles for CIOs today, especially those in regulated industries: securely managing devices across any platform”.
“By providing even stronger cross-platform capabilities, our customers will not have to compromise on their choice of operating systems, deployment models or any level of privacy and security.”
He added that both companies have a strong global presence in the business and government sectors, and that the deal would boost Blackberry’s sales and distribution capabilities as well as its revenues from enterprise software.
According to BlackBerry, Good provides services to more than 6,200 organisations, including many Fortune 100 companies, commercial banks, aerospace and defence firms. Meanwhile, BlackBerry says it is the mobility partner of 16 of the G20 governments, the ten largest global banks and law firms and the five largest managed healthcare, investment services and oil and gas companies.
BlackBerry expects the deal to close toward the end of its third fiscal quarter in 2016.
Good’s financial advisers on the deal were JP Morgan Securities and Bank of America Merrill Lynch, both of which provided a fairness opinion to its board of directors.