BlackBerry and Samsung have both denied reports that the companies have held merger talks.
News of the talks, first reported by Reuters, sent shares in the troubled Canadian smartphone maker up by almost 30% in New York on Wednesday, although the stock was down 16% in morning trading on Thursday following the denials.
BlackBerry said it had “not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry” and would not make any further comment.
A Samsung spokeswoman said: “Media reports of the acquisition are groundless.”
Patent portfolio
The South Korean company’s interest in BlackBerry is thought to centre on the Canadian company’s strong presence in the corporate smartphone market. The vast majority of Samsung handset sales come in the consumer market, where profit margins have been eroded by fast-growing competition from Chinese manufacturers in particular.
Samsung is also interested in BlackBerry’s portfolio of about 44,000 patents, worth some $1.4bn, although some analysts believe their true value could be considerably higher.
Edward Snyder, managing director of Charter Equity Research, said Samsung would need to bid for the whole company because BlackBerry did not want to sell specific assets: “Samsung will have to buy the whole thing and then and shutter what they don’t need.”
Shares in BlackBerry were trading at US$10.56 on Thursday, valuing the company at about $5.5bn. Samsung is understood to be prepared to bid as much as $15.49 a share, which would value the Canadian group at about $7.5bn.
Analysts have target prices of between US$7 and US$10 for BlackBerry shares.
Regulatory concerns
Samsung would face a number of hurdles to winning control of BlackBerry, such as Canadian government approval of a takeover by a foreign company.
Washington DC would also be concerned because BlackBerry manages the email traffic of government and military agencies as well as thousands of large corporate customers. A deal is likely to require approval by the committee on foreign investment in the United States.
A deal would also require the blessing of Prem Watsa, whose Fairfax Financial Holdings is a major Blackberry shareholder. Fairfax declined to comment.
In November BlackBerry announced a partnership with Samsung that would link BlackBerry’s security platform with the South Korean company’s own security software for its Galaxy smartphones.
Samsung’s KNOX software for security-conscious business customers has not proved popular, unlike the well-regarded BlackBerry equivalent.
KNOX is also based on Google’s Android operating system, which the South Korean company is trying to reduce its reliance on.
On Wednesday Samsung released a long-delayed smartphone based on its own Tizen operating system, but doubts about whether it will prove popular with consumers abound.
