BlackBerry Ltd. (BBRY) Lenovo Merger Would Face Regulatory Hurdles

0
BlackBerry Ltd. (BBRY) Lenovo Merger Would Face Regulatory Hurdles
user1462590383 / Pixabay

As we reported yesterday, Chinese computer maker Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) has expressed renewed interest in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). Sources familiar with the matter told Reuters that the Chinese company has signed a non-disclosure agreement with the Canadian company to examine the latter’s books. However, if it bids for the entire BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB), the Chinese company will face massive regulatory hurdles. So, Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) may pursue just a part of the Z10 maker.

BlackBerry Ltd. (BBRY) Lenovo Merger Would Face Regulatory Hurdles

Blackberry acquisition an important security issue

Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) had also expressed interest in the company a few months ago. Since BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB) put itself up for sale, the company has drawn interest from a number of potential buyers, ranging from private equity firms to  its own competitors. A consortium led by BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB)’s largest shareholder Prem Watsa has made a preliminary offer of $9 per share to take the company private. BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB) is currently reviewing alternatives to Prem Watsa’s offer.

SALT New York: Wellington’s CEO On The Benefits Of Active Management

At this year's SALT New York conference, Jean Hynes, the CEO of Wellington Management, took to the stage to discuss the role of active management in today's investment environment. Hynes succeeded Brendan Swords as the CEO of Wellington at the end of June after nearly 30 years at the firm. Wellington is one of the Read More

The sale of BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB), or any part of it, will go through strict regulatory scrutiny in Canada and the U.S. The secure network is BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB)’s most important asset. It handles millions of highly confidential government and corporate emails every day. So, the U.S. government will not let it go to a Chinese company for security reasons. Security experts argue that, in any case, the secure network will go to a North American company. So, Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) may likely bid for the Canadian company’s handset business.

On the other hand, Canadian regulations allow the federal government to block any foreign acquisition of a Canadian business. The government can block a deal if it thinks that the deal could be a threat to national security or if the takeover doesn’t bring a ‘net benefit’ to the nation.

Why is Lenovo interested in BlackBerry?

Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) has grown to become the world’s fifth-largest smartphone vendor. But 98 percent of its smartphone sales still come from its home market. Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) hasn’t succeeded in overseas markets. Even in China, the company is facing stiff competition from rapidly growing Xiomi. Acquiring BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB)’s handset business could help Lenovo Group Ltd. (OTCMKTS:LNVGY) (HKG:0992) improve its presence in overseas markets.

BlackBerry Ltd. (NASDAQ:BBRY) (TSE:BB) shares jumped 0.85 percent to $8.28 at 11:36 AM EDT.

Updated on

No posts to display