BlackBerry shares soared by more than 25% suddenly after a report from Reuters suggested Samsung had approached the company about possibly buying it out. According to the report, the Korean electronics giant suggested it would pay between $13.35 and $15.49 per share for the struggling Canadian smartphone maker.
That represents a premium of between 38% and 60% over BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s share price before the Reuters report. Executives for both companies were said to have met last week to discuss the possibility. The offer would place a value of up to $7.5 billion on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Documents reviewed by Reuters indicate that the offer assumes that $1.25 billion in convertible debt would be converted.
Details on the BlackBerry buyout rumor
That represents a premium of between 38% and 60% over BlackBerry’s share price before the Reuters report. Executives and advisers for both companies were said to have met last week to discuss the possibility. The offer would place a value of between $6 billion and $7.5 billion on BlackBerry. Documents reviewed by Reuters indicate that the offer assumes that $1.25 billion in convertible debt would be converted.
Samsung is apparently interested in BlackBerry’s patent portfolio, which makes sense since that could be one of the most valuable parts of the business. In fact, when BlackBerry management was exploring strategic alternatives and potentially exploring a sale, analysts were inundating us with their views on how much BlackBerry’s patents were worth.
Shares of BlackBerry were trading at around $9.66 apiece before the report, and they shot up as high as $13 a share immediately after. The company’s stock hasn’t traded this high since June 2013. Also CNBC reports that today was BlackBerry stock’s best day since December 2003.
Is Samsung nuts?
Undoubtedly we’ll start getting a bunch of headlines about whether Samsung would be crazy to buy BlackBerry. The purchase price certainly seems high, particularly for a company that has yet to show that its turnaround efforts will be successful.
Then again, Samsung management may be feeling like they have to do something in light of the struggling Galaxy S5 sales. Doing something that seems crazy like buying BlackBerry may suggest they don’t have much confidence in the upcoming Galaxy S6 and whether sales will be better than they were for the Galaxy S5.
At any rate, this whole report brings back memories of the rumor about Lenovo being interested in buying BlackBerry. This time around though, the rumor about Samsung seems to have more substance, as Reuters claims to have actually seen documents pertaining to it.
Samsung looking to expand BlackBerry partnership?
Of course it may not actually seem as strange as it sounds that Samsung would want to buy BlackBerry. The two companies announced a partnership in mobile security in November. Samsung revealed plans to bring BlackBerry’s security platform to its Galaxy devices. Clearly the Korean tech giant is seriously targeting enterprise customers, which has become a growing trend in the smartphone market as companies battle for share.
BlackBerry has been heavily focused on trying to win back the enterprise customers that once loved its devices so much, but it faces stiff competition from Apple, which wants a chunk of the enterprise pie too. With Samsung shifting its focus to enterprise customers as well, it highlights just how important this fresh battleground in mobile is.
The bring-your-own-device trend essentially kicked off the need to target consumers at first. Now that Apple and Samsung have the consumers, it makes sense for Samsung to take the next step, which is mobile device management. Enterprise customers need servers and software to manage all those employee devices, and BlackBerry is banking on its BES 12 being a hit. So far though, it’s too early to tell if enterprises really are going to buy it.
Of course slapping a Samsung label on it just might help…