NEW YORK/SEOUL (Reuters) – Samsung Electronics recently offered to buy BlackBerry Ltd for as much as $7.5 billion, seeking its valuable patents as it battles Apple in the corporate market, according to a person familiar with the matter and documents seen by Reuters.
South Korea’s Samsung proposed an initial price range of $13.35 to $15.49 per share, representing a premium of 38 per cent to 60 per cent 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 per cent following the Reuters report, fell back about 15 per cent in after-hours electronic trading following the statement.
Samsung also told Reuters 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 $7 billion, fall well below BlackBerry’s potential asset value in the next few years, according to the Globe and Mail report.
BlackBerry, a one-time investor darling that pioneered smartphones, has regained some of its lost swagger under Chief Executive John Chen, who is leading a bid to regain market share it has lost to Apple Inc, Google Inc and Samsung.
“BlackBerry is in such transition today, so any investment has been a bet on the future, so at this point Samsung is cutting in before that full future becomes a reality,” said Morningstar analyst Brian Colello.
Samsung’s strength as the No 1 global smart phone 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.
“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.
Any tie-up with Samsung would require the blessing of Prem Watsa, whose Fairfax Financial Holdings Ltd is a major Blackberry shareholder. Fairfax helped bankroll a debt recapitalization that led to Chen’s arrival in November 2013 as CEO. Paul Rivett, president of Watsa’s Fairfax Financial Holdings, declined to comment.
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 email 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 Reuters show.