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BlackBerry Ltd tumbled on Thursday after the Canadian smartphone maker and Samsung Electronics Co denied a report they are in talks about a deal.
After surging on Wednesday, BlackBerry shares fell 17 per cent to $10.41 at 9:31 am in New York. The stock is still higher than its closing price on Tuesday, before Reuters reported that Samsung approached BlackBerry with an initial takeover offer of $13.35 to $15.49 a share, citing an unnamed person and documents. Reuters also said executives from the companies met last week to discuss a transaction, which would value BlackBerry at as much as $7.5 billion.
The report is "groundless," Samsung said in an e-mail. In a separate statement, BlackBerry said it "has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry." The Waterloo, Ontario-based company didn't specify whether it had received a proposal from Samsung, the world's largest smartphone maker.
BlackBerry gets offers all the time, according to a person close to the company, who asked not to be identified discussing private information. Investors would want a much higher takeover price than what Reuters reported, the person said.
The reported purchase price would be at least a 37 per cent premium to BlackBerry's closing price of $9.71 on January 13. BlackBerry rose 30 per cent to $12.60 at the close in New York on January 14, its biggest gain in more than a decade.
"The BlackBerry assets that Samsung may have interest in would be its broad patent portfolio covering security and the business-to-business sector, as well as its car entertainment software," Lee Seung Woo, an analyst at IBK Securities Co in Seoul, said by phone. "Still, $7.5 billion seems way too high."
That price would be almost double the biggest acquisition by the Suwon, South Korea-based company, according to data compiled by Bloomberg. In 2012, Samsung Electronics bought a 36 percent stake in Samsung Mobile Display Co from Samsung SDI Co for about $3.8 billion.
The companies are part of the Samsung Group conglomerate.
Two months ago, BlackBerry announced it was teaming up with Samsung for a management-services partnership. It marked the first time the competitors worked together on a major product.
Samsung knox
Samsung's Knox system, which offers a suite of secure work applications, can now run on BlackBerry's new server, known as BES12. The partnership competes with an alliance of International Business Machines Corp and Apple Inc.
The cooperation was one piece of Chief Executive Officer John Chen's efforts to focus BlackBerry on business users and security as he aims to reach sustainable profit and revenue growth in the fiscal year that ends in 2016. He already reached a milestone of generating cash again in the most recently reported quarter.
BlackBerry shares rose 48 percent in 2014 as Chen's turnaround strategy started to take hold. That compares with the company's heyday in 2008, when the stock closed above $147 before its share of the smartphone market dwindled.
Much of that ground was lost to Samsung, which ships about one of every four smartphones globally. The company now is under pressure at the high end from Apple Inc.'s new iPhones and in the mid-range from Chinese makers including Xiaomi Corp. and Huawei Technologies Co.
Government Review
Any potential deal for BlackBerry may require the approval of the Canadian government. Canada reviews foreign takeovers valued at more than C$354 million ($296 million) to determine if the deal represents a "net benefit" to the country.
The government also can review deals based on national- security considerations. Jake Enwright, a spokesman for Canadian Industry Minister James Moore in Ottawa, said he couldn't comment on "speculation and rumors."
Canadian Finance Minister Joe Oliver, speaking in Vancouver, declined to comment on whether the government received advance notice of an offer for BlackBerry or whether it would allow the South Korean company to acquire BlackBerry.
Chen took over in late 2013 after a plan collapsed to take the smartphone maker private. Since then, Chen has focused on providing software and security for governments and corporations, while also introducing new phones that cater to business users, like the Passport and the Classic.
