BlackBerry Shares Up After Reports of Possible Lenovo Buyout

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By Reuters | Updated: 21 October 2014 10:18 IST
BlackBerry shares rose more than 3 percent on Monday after a news website said Chinese computer maker Lenovo Group might offer to buy the Canadian technology company.

Benzinga.com, citing an unnamed source familiar with the matter, said an offer worth $15 a share could come as early as this week.

Lenovo and BlackBerry said their companies did not comment on rumors and speculation.

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Rumors of a Lenovo bid for BlackBerry have swirled many times over the last two years. Senior Lenovo executives at different times have indicated an interest in BlackBerry as a means to strengthen their own handset business.

The speculation reached a crescendo in the fall of 2013, when BlackBerry was exploring strategic alternatives.

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Sources familiar with the situation however, told Reuters last year that the Canadian government had strongly hinted to BlackBerry that any sale to Lenovo would not win the necessary regulatory approvals 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. Under Canadian law, any foreign takeover of BlackBerry would require government approval under the Industry Canada Act.

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Canadian Prime Minister Stephen Harper told Reuters in February 2012 that he wanted BlackBerry to grow "as a Canadian company." And in December 2011, then-Industry Minister Christian Paradis referred to the company as a "Canadian jewel."

Analysts also have said any sale to Lenovo would face regulatory obstacles, but they have suggested that a sale of just BlackBerry's handset business and not its core network infrastructure might just pass muster with regulators.

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BlackBerry's long-struggling handset business turned a profit before special items in the last quarter, after the Waterloo, Ontario-based company concluded its three-year restructuring program.

However, BlackBerry Chief Executive Officer John Chen has said he sees the handset business as core to the company for now, as it will foster sales growth over the next few quarters until the software and services business begins to generate new revenue streams in the first half of 2015.

Shares of BlackBerry were up 3.4 percent at $9.81 in early Nasdaq trading. Its Toronto-listed shares were up 3.1 percent at C$11.03.

© Thomson Reuters 2014

 

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Further reading: BlackBerry, Lenovo, Mobiles
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