BlackBerry acquisition: Top suitors to buy out the company
BlackBerry's push for BlackBerry 10 devices was thought to boost the company's outlook earlier this year. We now know that's not the case. BlackBerry lost almost $1 billion in just 90 days, with 3.7 million BlackBerry smartphones sold. The majority were BlackBerry 7 handsets.
Now the company wants to sell itself as a whole or in parts to a potential suitor or suitors. BlackBerry has formed a committee to explore strategic options in the hope of selling itself by November. Several companies have come forward to show interest in BlackBerry, so we've taken an opportunity to round-up the potential candidates.
Fairfax Financial, a holdings company based in Toronto, has been at the forefront of the BlackBerry buyout. The company offered BlackBerry $4.7 billion in September, and is currently in a six-week period to conduct due diligence to make sure the acquisition is in order.
If Fairfax Financial were to buyout BlackBerry, it's not clear what changes would immediately be seen. We suspect the financial company would focus on making the company profitable again, but it's not clear how that would be achieved.
Fairfax, which owns approximately 10 per cent of BlackBerry's common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction. Until recently the chairman of Fairfax holdings was on the board at BlackBerry.
However according to Bloomberg, Fairfax Financial may be unable to find funding or partners for the $4.7 billion buyout, indicating the deal may be crumbling.
Shortly after word hit that Fairfax Financial might be unable to put a deal together, a filing with the US Securities and Exchange Commission indicated BlackBerry co-founder Mike Lazaridiswass considering buying the company.
The filing showed Lazaridis had increased his stake in the company to 8 per cent, and at the same time was courting Goldman Sachs and Centerview Partners to help "with their review of strategic alternatives".
Lazaridis and other BlackBerry co-founder Douglas Fregin are considering "a potential acquisition of all the outstanding Shares of the Issuer that they do not currently own, either by themselves or with other interested investors", according to the filing.
Industry insiders are speculating the Lazaridis/Fregin bid could push Fairfax away from the deal. But it should be clear the two co-founders haven't committed or shot a bid at BlackBerry. The SEC filing simply shows the two are considering it.
Lazaridis stepped away from BlackBerry in January with his co-CEO Jim Balsillie, leaving Thorsten Heins to take over the reins of the company. Lazaridis coming back into the company could be a big deal. Founders are known for wanting to come back and reshape the company they founded - look at Michael Dell, Bebo, and Best Buy.
Lenovo is the latest company to show interest in BlackBerry, according to The Wall Street Journal. Lenovo was rumoured to be purchasing BlackBerry earlier this year, but the company denied it at the time. Now that BlackBerry is up for sale and has several parties lined up for bids, Lenovo's name has resurfaced.
Government contracts make up a large portion of BlackBerry's sales base, and we wonder what a deal with Lenovo would do to those. Since Lenovo is a China-based company, the US government could fear potential spying. It may seem silly, but it's the same reason the US has shown concern about China-based handset-maker Huawei. Huawei, on the other hand, asserts it has never been approached by or spied for government officials.
Industry insiders are saying there's a good chance the Canadian government would shoot down the deal.
Lenovo has yet to come out and say anything official. It's more than likely mulling a bid internally, perhaps waiting to see how the Fairfax deal pans out.
Like Lenovo, Cerberus Capital Management has gained access to BlackBerry's financial books and is mulling an offer for BlackBerry.
Parts of the company: Cisco, Google , SAP and Samsung
Rather than buying the company outright, there also is the option for BlackBerry to be purchased in pieces. For example, BlackBerry's Messenger unit is seen as very enticing given its large user base and one of the sole reasons many users are drawn to BlackBerry.
If a deal doesn't work out with Fairfax Financial or the BlackBerry co-founders, BlackBerry being sold in pieces is looking likely.
Some of the potential companies rumoured to be looking at parts of BlackBerry are Cisco, Google, SAP, and Samsung. If you look at what each company specialises in, parts of BlackBerry would meld well.
For example, Google has long been after patents - this was evident with the company's purchase of Motorola. BlackBerry is seen to have a "goldmine" patent portfolio that a company could have access to via buyout to avoid patent litigation down the road. There's also BlackBerry's device unit that could be folded in with Android.
Samsung has a large focus on devices, and recently has been looking to break into the enterprise market with its Knox product. BlackBerry has several government contracts and a focus on the enterprise market that could potentially help Samsung make a breakthrough. BBM services integrated on Samsung devices could be helpful, too.
SAP and Cisco are both software corporations that make enterprise software to manage business operations and customer relations. BlackBerry's software unit and patents could potentially be ripe for picking.
How much parts of BlackBerry are worth has not been detailed , but industry insiders have noted BlackBerry is worth more as separate entities rather than a whole.