One could argue that desperate times are upon Samsung as its tussle with Apple continues. The company experienced a slowdown in sales while Apple’s new iPhones have proved to be massively popular. In order to stay ahead in this fight and renewed competition from the likes of Xiaomi in developing markets, the Korean giant seems to be employing every weapon in the arsenal…or outside it. That could explain why Samsung Electronics recently proposed to purchase the patents of BlackBerry Ltd for $7.5 billion.
According to Reuters, the proposed value was 38 to 60 percent above the current value of BlackBerry’s shares. Representatives from both the corporations got together to discuss a potential transaction just recently. Given the private nature of these conversations, the source lent this information on the sole condition of anonymity.
Denial from BlackBerry
Interestingly, BlackBerry refused in a public statement to have participated in any discussions with Samsung that involved an offer of the purchase of its shares. Speaking of BlackBerry’s shares, they had shot up to almost 30 percent after reports of the possible buy out transpired but descended to nearly 15 percent after the public statement was issued.
BlackBerry’s take on such deals
The public statement is well in line of BlackBerry’s own beliefs about its value as a corporation. Canadian newspaper, Globe and Mail has previously reported that BlackBerry has turned down such offers on multiple occasions in the recent past. This is mainly due to the board’s belief that the value of BlackBerry’s assets exceeds what such deals may have to offer. The patent portfolio comprises about 44,000 patents which exceeds $1.43 billion recorded in last August’s net book value of assets.
Analysts’ take on the matter
Analysts believe that it could be an attempt to cash in on BlackBerry’s full potential that is yet to materialize. Some hint at the opportunity Samsung has of dishing out the next best business smartphones with a deal like this. More importantly, with a network that offers such secure features Samsung could enjoy an exalted position that could allow it to differentiate itself from all the rest.
Every deal comes with approval
There are complications involved if this alliance is to come about. Fairfax Financial Holdings Ltd remains the major shareholder of BlackBerry. To put things into context, Fairfax assisted in bankrolling a debt recapitalization which eventually resulted in CEO John Chen’s appointment at BlackBerry. Thus, Prem Watsa from Fairfax would surely have a say in making that call.
Any Blackberry sale requires regulatory approval as authorities don’t want foreign companies handing sensitive data
Regulatory authorities in Washington and Ottawa also call for state approval in case of a foreign takeover. After all, the corporation’s networks accommodate email traffic of not only high profile corporate clients but government agencies and military as well. In addition, approval from Committee on Foreign Investment in the United States (CFIUS) is also inevitable in deals that involve national security implications. Though, Samsung believes that keeping a share of BlackBerry as a publicly traded entity complemented by an independent board would mitigate the process of winning support of CFIUS.