Samsung approaches BlackBerry about buyout
(Reuters) - Samsung Electronics Co Ltd (
005930.KS) recently approached BlackBerry Ltd (
BBRY.O) (
BB.TO)
about buying the smartphone maker for as much as $7.5 billion in a play
for its patent portfolio, according to a person familiar with the
matter and documents seen by Reuters.
South Korea's Samsung proposed
an initial price range of $13.35 to $15.49 per share, representing a
premium of 38 percent to 60 percent over BlackBerry's current trading
price, the source said.
Executives
from the two companies, which are working with advisers, met last week
to discuss a potential transaction, the source said, asking not to be
identified because the conversations are private.
It
remains unclear whether Blackberry, which has regained some of its lost
swagger under CEO John Chen over the past year or so, was open to the
approach. Representatives for the company declined to comment.
News
of the meeting, which sent Blackberry shares up nearly 30 percent,
comes as the smartphone maker looks for renewed growth and for how to
regain market share it has lost to Apple Inc, Google Inc and Samsung.
A deal would give Samsung access to Blackberry's patents, which the source said would help it take on arch rival Apple (
AAPL.O).
Any tie up with Samsung would have to have the blessing of Prem Watsa, whose Fairfax Financial Holdings Ltd (
FFH.TO)
is a major Blackberry shareholder. Fairfax helped bankroll a debt
recapitalization that led to Chen's arrival in November 2013 as CEO of
the one-time investor darling that pioneered the smartphone.
BlackBerry
launched its long-awaited Classic model on Wednesday, hoping to help
win back market share and woo customers still using older devices with a
keyboard. The phone resembles its once popular Bold and Curve handsets.
In the third quarter, revenue at
Blackberry fell to $793 million from $1.19 billion a year earlier,
falling short of analysts' expectations of $931.5 million.
Shares of Blackberry jumped as much as 30 percent on heavy volume in afternoon trading at $29.71 per share in New York.
The
offer price would imply an enterprise value of $6 billion to $7.5
billion for BlackBerry, assuming conversion of $1.25 billion of
convertible debt, according to the documents.
BlackBerry
announced a high-profile security partnership with Samsung in November.
The partnership will wed BlackBerry's security platform with the South
Korean company's own security software for its Galaxy devices.
Representatives for BlackBerry declined to comment while Samsung and Fairfax could not be immediately reached for comment.
(Reporting by Jennifer Ablan and Liana Baker in New York, additional
reporting by Alastair Sharp in Toronto Editing by Soyoung Kim and
Christian Plumb)