Reports of a rumored takeover bid suggest Korea's Samsung Electronics approached Waterloo, Ontario based BlackBerry Ltd. for as much as $7.5 billion. The report by Reuters sent Blackberry shares soaring on the New York and Toronto stock exchanges.
At the time, however, both Samsung and Blackberry denied the claims. The move by Samsung was believed to be an attempt to get hold of Blackberry's enterprise patent portfolio, an asset to big players in the smartphone industry including Apple and Microsoft.
The 30% rise in Blackberry shares was short-lived after ailing smartphone maker Blackberry said, "BlackBerry Limited is aware of certain press reports published today with respect to a possible offer by Samsung to purchase BlackBerry. BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry."
According to documents put forward by executives from both sides, Samsung's offer is equal to an enterprise value of $6 billion - $7.5 billion for the Canadian smartphone maker. The deal would also assume the conversion of $1.25 billion in convertible debt.
"South Korea's Samsung proposed an initial price range of $13.35 to $15.49 per share, which represents a premium of 38 percent to 60 percent over BlackBerry's current trading price," Macrumors reported.
Blackberry, an iconic phone maker exclusively catered to business users, is in the process of making a turnaround after losing out to Apple's iOS and Google's Android based phones.
Samsung, once a key rival to the Cupertino, California based Apple, has lost market share for smartphones since Samsung's Galaxy S5 did poorly against iPhone 6 sales. With smartphone markets saturated in the U.S. and Europe, consumers are turning to the appeal of the wearable gadgets. Apple Inc. has focused on taking advantage of cheaper margins in China, which is still relatively untapped.
"BlackBerry holds quite a few valuable patents, which are estimated to be worth $1 billion to $3 billion. In 2012 alone, its patent portfolio grew by 986 patents, many of which are relevant to competing smartphone companies like Samsung," MacRumors shared.
Rob Enderle, principal analyst at Enderle Group, said that he could see BlackBerry wanting to remain independent, but that such a merger "could be invaluable" to Samsung.
"Samsung has been trying to get [the Tizen OS] off the ground but has had trouble attracting developers, and BlackBerry has a larger number of these," he said.
"BlackBerry's patent portfolio is second to none and would help Samsung [compete] better against Apple and Microsoft. Finally, Blackberry's QNX is deeply embedded in automotive, and a parts builder like Samsung could see that as a market expansion opportunity. Samsung still builds and sells things like processors to other firms like Apple, and cars consume a lot of parts like this," he added.
